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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, 16 March 15
MAKING THE WORLD GO ROUND - SEABORNE TRADE! - CLARKSONS
Money, or even love if you prefer, are claimed to make the world go round. For the shipping world, however, it’s trade that sets things spinn ...
Monday, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
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- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- PTC India Limited - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
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