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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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Wednesday, 17 December 14
MARKET INSIGHT - INTERMODAL SHANGHAI, SNP TEAM
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing t ...
Tuesday, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
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- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Economic Council, Georgia
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
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- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Australian Coal Association
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
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