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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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Wednesday, 11 March 15
RICHARDS BAY COAL SWAPS DROP $ 3.65 - 4.0/T W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has fell US$ ...
Wednesday, 11 March 15
DRY BULK MARKET CLOSED OFF ON THE GREEN FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The Dry Bulk market closed off on the green for a second week in a row, while the performance of Capesizes hindered a more substantia ...
Wednesday, 11 March 15
MARKET INSIGHT : NEWBUILDINGS - PANOS TSILINGIRIS
From a cost-based, buy-low perspective, there is currently a buying opportunity in the second-hand dry bulk market. I am an anti-cyclical (buy-low) ...
Wednesday, 11 March 15
DRY BULK MARKET: ALL IS NOT LOST FOR A RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The low cost of commodities across the board could trigger an increase of trade among many countries, which in turn could lead to a recovery of the ...
Wednesday, 11 March 15
U.S. ELECTRIC GENERATING COMPANIES TO ADD MORE THAN 20 GW OF GENERATING CAPACITY IN 2015; 16 GW OF GENERATING CAPACITY IS EXPECTED TO RETIRE IN 2015
COALspot.com: In 2015, electric generating companies in U.S. expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the ...
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- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- MS Steel International - UAE
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Planning Commission, India
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Parliament of New Zealand
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
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