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