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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, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all sh ...
Monday, 30 March 15
Q3' 15 CFR SOUTH CHINA COAL SWAP: DECLINED 8.7% M-M; 12.77% Y-TO-D
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 5.00 (-8.70%) per MT month over month and US$ 1.33 (-2 ...
Monday, 30 March 15
Q2' FOB NEWCASTLE COAL SWAP CLOSED 4.47% HIGHER THAN Q4' CLOSING PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 5.42 per MT (-10.43%) month over month and US$ 1.60 (-3.32%) w ...
Sunday, 29 March 15
INDO - INDIA: SUPRAMAX & PANAMAX FREIGHT MARKET STEADY
COALspot.com: The freight market was almost stable as all segments slightly up except Panamax sector.
The BDI was up by just 0.85% week over w ...
Saturday, 28 March 15
IS NORTHERN EUROPE THE NEW MINING ELDORADO?
The Europe Mining 2015 Summit, organised by Global Summits organizer IRN on 17-18 June in Amsterdam, The Netherlands, will gather senior level repr ...
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- ASAPP Information Group - India
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Economic Council, Georgia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- The Treasury - Australian Government
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- White Energy Company Limited
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
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