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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, 13 October 14
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 54.92, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for delivery Q4' 2014 decreased US$ 0.80 (-1.46%) month over month and US$ 0.52 (-0.95%) week over ...
Monday, 13 October 14
INDONESIAN COAL SWAPS FOR DELIVERY Q4' 2014 GAINED WEEK ON WEEK AND DAY ON DAY
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 gained week on week and day on day.
The swap lost US$ 0.13 (-0.25%) month on mon ...
Monday, 13 October 14
Q1' 2015 CFR SOUTH CHINA COAL SWAP CLOSED US$ 0.31 PMT HIGHER THAN Q4' 2014 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 0.66 (-1.00%) month over month and US$ 0.40 (-0.61%) ...
Sunday, 12 October 14
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO BE WEAK - VISTAAR
COALspot.com: This week all the segments softened. The BDI down 7.13 pct week on week and closed below 1000 points at 963 points.
The Cape ind ...
Saturday, 11 October 14
COAL PRODUCTION RISES ONLY SLIGHTLY AS GOVT LIMITS MINING OPERATIONS - THE JAKARTA POST
Indonesian coal production rose by only 4 percent in the first nine months of this year, a relatively low increase compared to previous years, as t ...
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- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- White Energy Company Limited
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
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