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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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Tuesday, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
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- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- TNB Fuel Sdn Bhd - Malaysia
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- Attock Cement Pakistan Limited
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- PetroVietnam Power Coal Import and Supply Company
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- Petrochimia International Co. Ltd.- Taiwan
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- Chamber of Mines of South Africa
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- Billiton Holdings Pty Ltd - Australia
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- The University of Queensland
- SMC Global Power, Philippines
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- GN Power Mariveles Coal Plant, Philippines
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- Planning Commission, India
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- Global Business Power Corporation, Philippines
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- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
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- Deloitte Consulting - India
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- PNOC Exploration Corporation - Philippines
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- GVK Power & Infra Limited - India
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- The Treasury - Australian Government
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- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
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- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
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- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
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