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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, 30 June 14
WEEKLY CFR SOUTH CHINA COAL SWAPS DECLINE CONTINUES; Q1'15 LOST US$ 4.55 PMT IN A WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in Q3 fell US$ 5.25 month on month on Friday, dipping under $69 a tone. The CFR South Ch ...
Monday, 30 June 14
INDO - INDIA FREIGHT RATES CONTINUE TO WEAK
COALspot.com: The latest dry Index shows that average all-in spot freight declined, the Panamax and Supramax slipping by 9.11 percent and 4% respec ...
Friday, 27 June 14
DRY BULK MARKET STILL LOOKING FOR UPSIDE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept up its lacklustre performance during the past week, as evidenced by the course of the Baltic Dry Index (BDI). The BDI ...
Thursday, 26 June 14
PANAMAX : A PACIFIC ROUND PAYS AROUND US$ 3K DAILY - FEARNLEYS AS
Handy
In the Atlantic there has been little activity which again has caused rates to slip across all trades. TA´s are now down to US$ 5,500 ...
Thursday, 26 June 14
KOMIPO INVITES BIDS FOR TOTAL 750K MT OF BITUMINOUS COAL FOR 3CY
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) has issued a new tender for supply of total 250,000 MT of bituminous co ...
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- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- The University of Queensland
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
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