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