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