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