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