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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, 19 May 14
API 8 CFR SOUTH CHINA COAL LOST 2.49% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.49 percent month on month and closed at US$ 74.35 per mt as on F ...
Sunday, 18 May 14
FREIGHT RATES ARE EXPECTED TO BE FIRM NEXT WEEK
COALspot.com: The freight market was steady with the BDI was closed slightly higher at 1027 points or up 3.00 pct week on week.
The Cape ...
Friday, 16 May 14
KOMIPO IS LOOKING FOR 60K MT OF LOW VOLATILE BITUMINOUS COAL
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 60,000 Metric Tons (MT) of low volatile bitumi ...
Friday, 16 May 14
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.9 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Thursday, 15 May 14
PANAMAX : SHORT PERIOD UP TO ONE YEAR REPORTED IN THE 12.000-12.500 RANGE - FEARNRESEARCH
Handy
The Supra and handy market seems to be affected by the recent holidays in Singapore which still relatively quiet. There are some Indo / ...
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- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- White Energy Company Limited
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
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