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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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- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
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