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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, 27 October 14
CFR SOUTH CHINA COAL SWAPS PERFORMED POSITIVE THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 1.68 (-2.55%) month over month and increased US$ 0.87 (+1.3 ...
Sunday, 26 October 14
CAPE'S STRONG PERFORMANCE PUSHES BDI INDEX UPWARDS
COALspot.com: The BDI was up by 26.27 pct and closed at 1192 points week and week. The Cape size performance has pushed up BDI and Cape size index ...
Friday, 24 October 14
WEEKLY U.S COAL PRODUCTION DOWN 2.7% FOR THE WEEK ENDING OCTOBER 18
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.7 million short tons (mmst) of coal in ...
Thursday, 23 October 14
THE BEARS, HOWEVER, STILL CRY; FOR HOW LONG WILL IT LAST? - FEARNLEYS
Handy
"We experience a typical oversupply of ships in the Atlantic which causing rates to slide. In the USG it is just enough cargoes to kee ...
Wednesday, 22 October 14
MARKET INSIGHT - THEODORE NTALAKOS, INTERMODAL
ECO designs - revisited
The ECO vessels are already here but the oil and bunker prices are plummeting to their cheapest level since 2010. Is this ...
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- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
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