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