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