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