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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, 11 August 14
INDONESIAN THERMAL COAL SWAPS SEEING SOME POSITIVE TREND
COALspot.com: Indonesian coal swaps for average September 2014 increased US$ 0.20 (+0.36%) day on day and US$ 1.30 (+2.41%) per mt week on week. Th ...
Monday, 11 August 14
SGX CFR SOUTH CHINA COAL SWAPS DIRECTION HEADING TO NORTH
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.50 (+0.74%) day on day and US$ 1.55 (+2.33%)&nbs ...
Monday, 11 August 14
A TALE OF TWO TRADES - EVA TZIMA
COALspot.com: It has without a doubt been “a cruel, cruel summer” for the Dry Bulk market so far and with second hand values still stan ...
Sunday, 10 August 14
FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com: This week the BDI and other segments saw some improvements. The BDI increased by 3.46 pct week on week and closed at 777 points.
...
Friday, 08 August 14
MINING DISPUTE IS CRIPPLING LOCAL ECONOMIES IN EASTERN INDONESIA - JG
- By Iwan Harsono -
It seems as if there’s no end in sight to the series of negotiations between the government and mining companies about ...
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- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- White Energy Company Limited
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- MS Steel International - UAE
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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