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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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Wednesday, 23 December 15
SHIPPING MARKET INSIGHT - PANOS MAKRINOS
As we are heading towards the end of the year we could argue that most of those involved in the shipping industry share mixed feelings for 2015. Th ...
Wednesday, 23 December 15
FOB NEWCASTLE COAL SWAP CLOSES FIRM
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery up $0.45 per ton (1.22%) month over month to US$ 37.20 per ton. The swap wa ...
Tuesday, 22 December 15
3800 GAR INDEX CLOSED AT US$ 22.03 PER TON; DOWN 0.15% W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.03 per ton (-0.07 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 21 December 15
Q3' 2016 CFR SOUTH CHINA COAL SWAP CLOSED SLIGHTLY LOWER COMPARE TO Q1'16 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery up US$ 0.20 (0.48%) per ton month over month.
A commodity swap is a ...
Sunday, 20 December 15
THE FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI facing all time low's this week. The bulk dry index closed at 477 points on 18 December 2015.
The cape index was als ...
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- Eastern Energy - Thailand
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- Price Waterhouse Coopers - Russia
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- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
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- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
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- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
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- Riau Bara Harum - Indonesia
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- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
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- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Australian Coal Association
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
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- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
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- Bayan Resources Tbk. - Indonesia
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- Singapore Mercantile Exchange
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- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
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- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
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- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
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- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
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- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
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- Anglo American - United Kingdom
- New Zealand Coal & Carbon
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- White Energy Company Limited
- London Commodity Brokers - England
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- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
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- Billiton Holdings Pty Ltd - Australia
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- European Bulk Services B.V. - Netherlands
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- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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