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