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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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Friday, 22 May 15
FOB INDONESIA COAL Q3'15 SWAP FINISHED THE WEEK UP 38 CENTS TO $43.65 PER MT
COALspot.com: Indonesian coal swap for delivery Q3 2015 gains week over week and lost month on month, past week.
The Q3 swap was declined US$ ...
Friday, 22 May 15
U.S WEEKLY COAL PRODUCTION STAYS FLAT AT 16 MMST
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.0 million short ...
Thursday, 21 May 15
PORT OF NEWCASTLE ACHIEVED ITS BEST EVER TOTAL COAL EXPORT TURNOVER OF 159 MILLION TONS IN 2014
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $900 million ...
Thursday, 21 May 15
ATLANTIC PANAMAX MARKET STARTED TO IMPROVE SLOWLY - INTERMODAL
COALspot.com: The Dry Bulk market closed off the week on the green last week, purely on the back of improved Capesize performance, while the rest o ...
Wednesday, 20 May 15
LOWER PRICES SEEN IN NEWBUILDING MARKET ON LOW DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Cash-rich ship owners, or at least, owners with substantial access to financing will be among the prime candidates, who will reap the benefits of t ...
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- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- The University of Queensland
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
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