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