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