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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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Wednesday, 23 July 14
WEEKLY SHIPPING MARKET INSIGHT - INTERMODAL
In Australia, the world’s largest mining group, BHP Billiton, will beat the iron ore export target of more than 220 million tonnes for 2014. ...
Wednesday, 23 July 14
HARD COAL 2013: THE WORLD'S SECOND-MOST IMPORTANT ENERGY SOURCE AND GUARANTOR FOR THE SECURITY OF ENERGY SUPPLIES DURING TIMES OF CRISIS
Hard coal is again in 2013 the fastest-growing fossil primary energy source in the world. As shown in the BP Statistical Review 2014, it covered ab ...
Tuesday, 22 July 14
INDONESIAN ELECTION RESULT ENCOURAGING FOR FOREIGN INVESTMENT IN ENERGY AND MINING SECTORS - WOOD MACKENZIE
Joko Widodo-Jusuf Kalla has been announced as the official winner of Indonesia's presidential election. Joko Widodo, or Jokowi, is viewed as a ...
Tuesday, 22 July 14
THE CURRENT COAL PRICES ARE UNPROFITABLE FOR MINERS; COAL PRICES WILL GRADUALLY INCREASE - FITCH
COALspot.com: The Fitch Ratings expect the benchmark Newcastle coal prices (currently at about USD70/MT) to gradually increase.
Fitch's la ...
Tuesday, 22 July 14
SUB-BIT FOB INDONESIA COAL Q3' 14 DOWN 5.21%; Q4' 14 DOWN 3.56%; Q1' 15 DOWN 4.75% M-O-M
COALspot.com: Indonesian coal swaps for average Q3’ 2014 flat on day, weak week on week and on month according to AsiaClear OTC coal swap' ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
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- IEA Clean Coal Centre - UK
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
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- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
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- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
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- Bangladesh Power Developement Board
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
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- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
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