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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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Monday, 01 June 15
35,000 MW POWER PLANTS TO BOOST COAL CONSUMPTION - JP
The government’s program to develop 35,000 megawatt (MW) power plants will increase domestic coal consumption, which currently stands at arou ...
Monday, 01 June 15
API 5 FOB NEWCASTLE COAL SWAP; Q1'16 CLOSED LOWER COMPARED TO Q3'15
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.36 per MT (0.80%) month over month. The swap was closed at US$ ...
Monday, 01 June 15
CFR SOUTH CHINA COAL SWAP: GAINED W-W, M-M; Q1'16 CLOSED HIGHER THAN Q3'15
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery up US$ 1.15 (2.26%) per MT month over month.
A commodity swap is a f ...
Sunday, 31 May 15
CAPE AND PANAMAX SEGMENTS SLIDE CONTINUES
COALspot.com: The BDI was up about 0.5 pct week on week and closed at 589 points while the cape index was fell 0.73 pct and closed at 810 po ...
Friday, 29 May 15
DRY BULK MARKET IS THE VICTIM OF A SHIFT IN DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The fall in dry bulk freight rates is attributed, in large part, to the substantial decrease of China’s thermal coal imports, a major commodi ...
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- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
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- ICICI Bank Limited - India
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- SMG Consultants - Indonesia
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- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
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- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
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- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
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- Trasteel International SA, Italy
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- Electricity Authority, New Zealand
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- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
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- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Planning Commission, India
- Goldman Sachs - Singapore
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- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Economic Council, Georgia
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- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
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- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Singapore Mercantile Exchange
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- Wilmar Investment Holdings
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- Baramulti Group, Indonesia
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- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
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- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
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- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- New Zealand Coal & Carbon
- Australian Coal Association
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
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- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
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- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
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- Tamil Nadu electricity Board
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- Anglo American - United Kingdom
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- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
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- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
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- Independent Power Producers Association of India
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- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
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- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
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- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
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