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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, 26 October 15
CFR SOUTH CHINA COAL SWAPS CLOSE DOWN 4.3% AS DEMAND CONCERNS WEIGH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US$ 1.48 (3.02 %) per ton month over month.
A commodity sw ...
Sunday, 25 October 15
ANOTHER DISAPPOINTING WEEK FOR PANAMAX; INDEX FELL 5.4 PERCENT W-W
COALspot.com: The BDI was slightly up by 2.65 pct closing at 774 points mainly because of Cape index which was up by 10.85 pct closing at 1461 poin ...
Sunday, 25 October 15
DRY BULK SHIP OWNERS ARE LOOKING TO CHINA'S POLICIES FOR CUES ON FUTURE MARKET DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s hard or softer landing is a thing which has troubled dry bulk shipping for a couple of years now, as owners have been hit by the coun ...
Friday, 23 October 15
WILL INDIAN DOMESTIC COAL PRICES BE ABLE TO COMPETE IMPORTED COAL PRICES IF THE CURRENT TREND CONTINUES?
COALspot.com: The Most of the Indian end-users are waiting for last minute purchase to enjoy every drop in price. Coal procurement managers are als ...
Friday, 23 October 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING OCTOBER 17 DECLINED FOR THE SECOND STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
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- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
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