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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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Thursday, 09 July 15
CPP MARKET : POSITIVE IN THE SHORT TERM - GEORGE VASTARDIS
Despite the traditionally quieter summer period, the clean tanker market has so far experienced healthy activity especially East of Suez. Increased ...
Thursday, 09 July 15
LACK OF FRESH BUSINESS IN THE PACIFIC LEFT CAPESIZE RATES MOVING SIDEWAYS - INTERMODAL
COALspot.com: Intermodal ship broker says in its weekly report that, a different picture from what we saw the previous week was painted during the ...
Wednesday, 08 July 15
RIO TINTO'S MODERNISED KITIMAT SMELTER BEGINS PRODUCTION; KITIMAT BECOMING ONE OF THE LOWEST COST SMELTERS IN THE WORLD
COALspot.com: Rio Tinto is preparing its first shipments of metal from its world-class Kitimat aluminium smelter in Canada following an extensive m ...
Wednesday, 08 July 15
Q3'15 INDONESIA COAL SWAP DECLINED 3.14% MONTH OVER MONTH
COALspot.com: Indonesian coal swap for delivery Q3 2015 declined month on month and week over week, this past week.
The Q3 swap was declined $ ...
Tuesday, 07 July 15
FOB RICHARDS BAY COAL SWAPS DECLINED WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 declined month over month and week over week.
The Q3 swap was down US$ ...
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- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- The University of Queensland
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
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