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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, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
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- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- VISA Power Limited - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- White Energy Company Limited
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
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