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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, 16 April 15
SHIPPING DEMAND TO SUFFER AS CHINESE SLOWDOWN CONFIRMED SAYS BIMCO'S CHIEF SHIPPING ANALYST - BIMCO
The Chinese economy grew by 7.0% y-o-y in the first quarter of 2015, according to National Bureau of Statistics in China. This is the weakest overa ...
Thursday, 16 April 15
INDIA: COAL IMPORTS RISE BY 33 PC TO 240 MT IN FY'15 - PTI
India’s coal imports in the just concluded FY 2015 increased by 33 per cent to about 240 million tonnes.
“Coal import have gone up ...
Thursday, 16 April 15
CAPESIZE: THE SUPPLY AND DEMAND SIDE ARE NOW SUFFERING HEAVILY - FEARNLEYS
Handy
It seems to be some standoff between owners and charterers in both hemispheres this week. Owners are raising their rates while charterers a ...
Thursday, 16 April 15
Q3 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 55.67 PMT
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month.
The Q2 swap has declined US$ 1.90 (3.17%) m ...
Wednesday, 15 April 15
PORT OF NEWCASTLE SHIPPED 13.63 MMT OF COAL IN MARCH; UP 4.41% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.227 billi ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
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