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