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