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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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Wednesday, 13 May 15
MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The EU governments in an effort to face their economic crisis individually are facing lack of political cohesion. This reflects back to each econom ...
Tuesday, 12 May 15
FOB INDONESIA COAL SWAP; DECLINED M-O-M AND W-O-W
COALspot.com: Indonesian coal swap for delivery Q3 2015 lost week over week and month on month, this past week.
The Q3 swap was declined US$ 0 ...
Tuesday, 12 May 15
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COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 increased month over month and decreased week over week.
The Q3 swap h ...
Monday, 11 May 15
DRY BULK CARRIER ORDERS CRASH TO A TWENTY YEAR LOW - CLARKSONS
In the last four months dry bulk orders have fallen to 0.4m dwt per month, the lowest level since the 1990s. This is a massive 98% reduction from t ...
Monday, 11 May 15
HBA PRICE DIPS FURTHER; LOWEST RECORDED SINCE JANUARY 2009
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal benchmark prices to US$ 61.08 per MT in May ...
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- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
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