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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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Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
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- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
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