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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, 18 May 15
FOB NEWCASTLE COAL SWAPS SCORE MONTHLY GAINS
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.87 per MT (1.99%) month over month and lost US$ 0.03 week on w ...
Monday, 18 May 15
Q1' 16 API 8 CFR SOUTH CHINA COAL SWAP CLOSED HIGHER THAN Q3' 15 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery up US$ 1.05 (2.10%) per MT month over month and US$ 0.53 (1.05%) pe ...
Sunday, 17 May 15
INDONESIA - INDIA FREIGHTS RATES EXPECTED TO FLAT TO SOFT NEXT WEEK
COALspot.com: The BDI was up by 10.45% and closed at 634 points week on week, while the Cape index saws big jump or up almost 55% for the same peri ...
Friday, 15 May 15
DRY BULK AND CONTAINER SHIPPING TO REMAIN WEAK, OUTLOOK FOR PORTS AND TANKERS POSITIVE - DREWRY MARITIME EQUITY RESEARCH
Global economy is in a gradual recovery mode, sending mixed signals to investors. Chinese economic data continues to remain weak as economy transit ...
Friday, 15 May 15
COAL PRODUCTION IN U.S DOWN 1.4 MILLION TONS FOR THE WEEK ENDING MAY 8
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.0 million short ...
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- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- The University of Queensland
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Australian Coal Association
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Posco Energy - South Korea
- PTC India Limited - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
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