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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, 03 November 15
API 5 FOB NEWCASTLE COAL SWAPS DECLINE CONTINUES
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery slid $1.84 per ton (4.34%) month over month to US$ 40.54 per ton. The swap ...
Tuesday, 03 November 15
EU OIL MAJORS FACE FURTHER EARNINGS DECLINE IN Q415 - FITCH RATINGS
The sharp drop in major European oil companies' third-quarter profits is likely to be extended in the fourth quarter as refining margins, which ...
Monday, 02 November 15
DESPITE CHALLENGING MARKET CONDITIONS, ADARO LOWERS COSTS, DEBT AND DELIVERS STRONG FREE CASH FLOW
COALspot.com: Despite challenging market conditions, Adaro lowers costs, lowers debt and delivers strong free cash flow.
The Indonesia’s ...
Monday, 02 November 15
CFR SOUTH CHINA COAL SWAPS CLOSED ON A WEAK NOTE
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined US$ 1.81(3.71 %) per ton month over month.
A commodity swap ...
Sunday, 01 November 15
THE FREIGHT MARKET SENTIMENT REMAINS WEAK
This week’s freight market sentiment remains weak compared to last week.
The Baltic Dry Index (BDI), an economic indicator issued daily ...
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- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- The University of Queensland
- MS Steel International - UAE
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Posco Energy - South Korea
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
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