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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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Tuesday, 07 October 14
API 8 CFR SOUTH CHINA COAL SWAP HEADED SOUTH
COALspot.com: API 8 CFR South China Coal swap for delivery in November 2014 decreased US$ 1.10 (-1.64%) month over month and US$ 0.25 (-0.38%) ...
Monday, 06 October 14
' COAL-BY-WIRE' FROM SUMATRA TO JAVA - THE JAKARTA POST
Coal from the island of Sumatra accounts for most of Indonesia’s low-grade lignite, a low-quality coal that receives a poor price in internat ...
Monday, 06 October 14
THE IRON ORE SHIPPING BUSINESS IS FACING SOME ROUGH SEAS - EAST ASIA FORUM
The impact of Chinese demand on global iron ore prices is well known. A less acknowledged consequence of China’s emergence is the transformat ...
Sunday, 05 October 14
BALTIC DRY INDEX SLIPS 1.14%; BALTIC PANAMAX INDEX GAINED 9.91% WEEK ON WEEK
COALspot.com: The BDI was down by 1.14 pct and closed at 1037 points this Friday.
The Cape index was down significantly week on week or lost 5 ...
Friday, 03 October 14
U.S. WEEKLY COAL PRODUCTION UP 5.8% TO 19.9 MMST
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.9 million short tons (mmst) of co ...
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- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Economic Council, Georgia
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
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