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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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Sunday, 18 October 15
THE BDI AND OTHER INDICES CLOSED OFF ON NEGATIVE NOTE THIS FRIDAY
COALspot.com: The BDI closed off on negative note this Friday compared to previous Friday's closing.
The BDI closed this Friday (16 Octobe ...
Friday, 16 October 15
MAJOR REVISION OF NYPE TIME CHAPTER PARTY - BIMCO
Major revision of NYPE time charter party promises to be both balanced and comprehensive
BIMCO has today jointly issued the first revision of ...
Friday, 16 October 15
FOB INDONESIA COAL SWAP FOR Q4'15 DELIVERY FLAT WEEK OVER WEEK; DOWN 5.5 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and flat week over week.
The Q4 swap declined $ 2.23 (-5.51%) ...
Friday, 16 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK; DOWN 11.3 PER CENT Y-Y, DOWN 3.5 PERCENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.1 million shor ...
Friday, 16 October 15
INDONESIA REJOINING OPEC DESPITE BEING A NET IMPORTER OF PETROLEUM - EIA
The Organization of the Petroleum Exporting Countries (OPEC) notified Indonesia that it plans to accept the country's request to reactivate its ...
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- Singapore Mercantile Exchange
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
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