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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, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
Sunday, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
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- Siam City Cement - Thailand
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
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