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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, 28 July 14
Q3' 14, SUB-BIT FOB INDONESIA COAL SWAP GAINED $ 0.08 DAY ON DAY AND $ 0.68 WEEK ON WEEK
COALspot.com: Indonesian coal swaps for average Q3’ 2014 increased by just US$ 0.08 day on day and US$ 0.68 week on week. The swap was lost U ...
Monday, 28 July 14
S. KOREA'S KOSPO SEEKS 148K T OF 4700 NAR COAL
COALspot.com: Korea Southern Power Co Ltd (KOSPO) is seeking 148,000 tonnes of 4,700 kcal/kg NCV steaming coal for shipment between October to Nove ...
Monday, 28 July 14
CFR SOUTH CHINA COAL SWAP SLIGHTLY UP WEEK ON WEEK
COALspot.com: Coal price falling is continues as the impact oversupply and lower demand. The swap for Q3, Q4 and Q1 2015 showing slight improvement ...
Sunday, 27 July 14
RAMADAN HOLIDAYS IN INDONESIA PUTTING PRESSURE ON CHARTER RATES FROM INDONESIA - VISTAAR INDIA
COALspot.com: The freight rates were almost steady as very slight improvement in BDI by about 1 pct. The BDI was at 739 points after improvin ...
Saturday, 26 July 14
COAL MINING COMPANIES CLOSED TEMPORARILY - THE JAKARTA POST
The Sarolangun regency administration in Jambi has suspended the operations of 10 coal mining companies in line with a circular issued by Regent Ce ...
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- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
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- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
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- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
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- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
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