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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, 04 August 14
Q1' 15 API 8 CFR SOUTH CHINA COAL SWAP CLOSED AT US$ 69.37 ON 1 AUGUST 2014; A $ 1.10 HIGHER COMPARED TO Q4' 2014 CLOSING
COALspot.com: Coal swap prices are showing a positive move upward this past week. API 8 CFR South China Coal swap for Q4, Q1 and Q2 2015 show ...
Sunday, 03 August 14
LACK OF COAL SHIPMENTS FROM FAR EAST/SE ASIA, THE PRESSURE ON CHARTER RATES CONTINUED THIS WEEK
COALspot.com: This week, the freight rates were almost flat as charter rates were also almost steady from last week.
The BDI was up by 2.59 pc ...
Friday, 01 August 14
UNCERTAINTY IN ASIAN COAL MARKETS WHERE INDEX-LINKED PRICING DOMINATES - SGX
COALspot.com: In the past 3 years, seaborne thermal coal markets have been in a state of constant oversupply.
Reuters expects this oversupply ...
Friday, 01 August 14
U.S PRODUCED 19.4 MMST OF COAL IN A WEEK, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Thursday, 31 July 14
CAPESIZE: CARGO VOLUMES, COAL IN PARTICULAR, PRESENTLY NOT SUFFICIENT TO EMPLOY A GROWING FLEET - FERNLEYS
Handy
Both the Atlantic and Pacific has improved in the supramax segment over the last week, said Fernleys in Its latest weekly report . There we ...
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- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- The University of Queensland
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
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