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