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