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