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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, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
Monday, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
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- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- PTC India Limited - India
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
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