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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, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
Sunday, 18 January 15
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN WEAK NEXT WEEK
COALspot.com: The BDI was up 4.51 pct week on week on Friday 16, January 2015. The BDI closed at 741 points on this Friday after gaining arou ...
Friday, 16 January 15
U.S. WEEKLY COAL PRODUCTION UP 7.3% W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 15 January 15
PANAMAX : MARKET CONTINUE ON LOW PACE - FEARNLEYS
Handy
On a general basis we can say that rates are softening in both hemispheres. Although for some specific trades we can see premiums being ach ...
Thursday, 15 January 15
LOW CASH COSTS, GOOD LIQUIDITY HELP ASIAN OIL COMPANIES IN PRICE ROUT - FITCH
Fitch Ratings says that rated oil and gas production companies in Asia can comfortably operate under low oil prices for some time given their gener ...
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- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Planning Commission, India
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
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