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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, 11 May 15
API 5 FOB NEWCASTLE COAL SWAP; INCREASED M-O-M; DECLINED W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.62 per MT (1.41%) month over month and lost US$ 0.88 week on w ...
Monday, 11 May 15
CFR SOUTH CHINA COAL SWAP: DECLINED MOM AND WOW
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 0.46 (-0.90%) per MT month over month and US$ 0.28 (0. ...
Monday, 11 May 15
KOREA MIDLAND POWER INVITES BIDS FOR 140K MT OF 4600 NAR COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued a new tender to buy total 140,000 Metric Tons (MT) of Sub-bitumi ...
Sunday, 10 May 15
FREIGHT RATES TO REMAIN SOFT NEXT WEEK
COALspot.com: The freight market was flat to soft week over week except for the Cape Index which was up 7.32%. Cape index was closed at 616 p ...
Friday, 08 May 15
BUSIEST CAPESIZE DEMOLITION MARKET EVER - BIMCO
The activity on the demolition market is off to a good start in 2015 when looking at dry bulk tonnage.
The dry bulk market has long suffered f ...
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- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Sical Logistics Limited - India
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Mjunction Services Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
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