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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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Tuesday, 04 August 15
SHIPPING CYCLES - A CHESS GAME YOU DON'T WANT TO LOSE - CLARKSONS
Ingmar Bergman’s classic movie The Seventh Seal is about a knight who, during the Black Death, challenges Death to a chess match, in the hope ...
Monday, 03 August 15
NEWCASTLE COAL SWAPS DECLINE FURTHER THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 1.92 per MT (-4.22%) month over month to US$ 43.58 per mt. The swap ...
Monday, 03 August 15
CFR SOUTH CHINA COAL SWAPS SLIDE THIS WEEK
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined US$ 1.64 (3.14%) per MT month over month.
A commodity swap ...
Sunday, 02 August 15
CAPESIZE RATES PUSH BDI UPWARD
COALspot.com: The freight market was buoyant this week as BDI rose 4.14 pct to 1131 points. The cape index was also increased 16.50 pct 2209 points ...
Saturday, 01 August 15
DRY BULK MARKET KEEPS ITS MOMENTUM, AS OUTLOOK IMPROVES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Although conditions remain more than challenging, especially from an economic point of view (aka China’s stock worries), the dry bulk market ...
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- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- The University of Queensland
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
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