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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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Wednesday, 19 August 15
FOB INDONESIA COAL SWAPS CONTINUE FLAT TREND LINE THIS WEEK
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and flat week over week, this past week.
The 4Q swap was decli ...
Tuesday, 18 August 15
DRY BULK: MARKETS HAVE CONTINUED TO BE SEVERELY CHALLENGED - CLARKSONS
The dry bulk markets have continued to be severely challenged with freight rates falling during the period to below operating expense. The Baltic D ...
Tuesday, 18 August 15
1Q'16 FOB RICHARDS BAY COAL SWAP FALLS BELOW $54 A TON
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined month over month and week over week.
The 4Q swap was down US$ ...
Tuesday, 18 August 15
2Q' 16 FOB NEWCASTLE COAL SWAP CLOSED AT $43 PER MT W/E 14 AUGUST
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 1.08 per MT (-2.46%) month over month to US$ 42.82 per mt. The swap ...
Monday, 17 August 15
TROUBLED DRY BULK MARKET FACES TURMOIL AS CHINESE COAL IMPORTS REMAIN WEAK - BIMCO
The demand for coal in China continues to diminish. So much in fact that India is expected to succeed China as the world’s largest imp ...
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- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
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- Metalloyd Limited - United Kingdom
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- Minerals Council of Australia
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- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
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- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
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- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
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- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Planning Commission, India
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- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
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- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
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- Goldman Sachs - Singapore
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Australian Coal Association
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- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Renaissance Capital - South Africa
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- Karbindo Abesyapradhi - Indoneisa
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- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
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- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- GMR Energy Limited - India
- Marubeni Corporation - India
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