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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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Thursday, 30 April 15
IRON ORE EXPORTS: A DANGEROUS RACE? - CLARKSONS
The surge in iron ore exports in recent years has resulted in a significant decrease in iron ore spot prices, which dipped to a ten year low of bel ...
Thursday, 30 April 15
IRON ORE PLAYS EXPECTED TO SHAPE UP MAY DRY BULK SCHEDULE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Market plays in the iron ore commodities’ markets, are expected to carve out the future demand for the shipping industry as well, said Allied ...
Wednesday, 29 April 15
MARKET INSIGHT - INTERMODAL
The figures of China’s slowing down imports of coking coal for the first quarter of the year are coming to confirm what everybody was expecti ...
Wednesday, 29 April 15
SHIPBUILDERS START OFFERING DISCOUNTS FOR DRY BULK NEWBUILDINGS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It took a while, but now it appears that some shipbuilders are beginning to adjust their price lists to the new grim reality of the dry bulk market ...
Tuesday, 28 April 15
FOB INDONESIA COAL SWAP DECLINED M-O-M; INCREASED W-O-W
COALspot.com: Indonesian coal swap for delivery Q2 2015 gained week over week but declined month on month.
The Q2 swap was declined US$ 0.15 ( ...
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- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Sical Logistics Limited - India
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
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