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