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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Tuesday, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
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- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Planning Commission, India
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
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