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