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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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Monday, 14 December 15
CFR SOUTH CHINA COAL SWAP IS STILL SLIDING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 0.93(2.18%) per ton month over month.
A commodity swap ...
Sunday, 13 December 15
THE LOW VESSEL DEMANDS PUSHED DOWN BALTIC DRY INDEX FURTHER DOWN
COALspot.com: The low vessel demand across nearly all vessel sizes pushed the Baltic Exchange’s main sea freight index further down in this F ...
Sunday, 13 December 15
DRY BULK RATES KEEP ON FALLING AS LOW VESSEL DEMAND IS STILL THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market nowadays is in an endless downward spiral, which as it turns out is unable to recover, at least as long as the current balance ...
Friday, 11 December 15
US COAL PRODUCTION UP 7.7% IN WEEK ENDED DECEMBER 5, 2015
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 10 December 15
LIENING CARGO - WHICH LIEN CLAUSE APPLIES TO THE BILL OF LADING? : WIKBORG REIN | HELLENIC SHIPPING NEWS
KNOWLEDGE TO ELEVATE
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether ...
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- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Australian Coal Association
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
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