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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, 31 March 14
CFR SOUTH CHINA COAL SWAP FOR Q2 14 DELIVERY LOST 1.17% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.17 percent month on month and closed at US$ 75.38 per m ...
Sunday, 30 March 14
FREIGHTS FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK - REDDY
COALspot.com: The freight market dropped drastically and all sectors were affected severely.
The BDI was down by 14.13 pct and closed at 1, ...
Friday, 28 March 14
US PRODUCED APPROXIMATELY 18.9 MMST IN A WEEK - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Friday, 28 March 14
CHINA'S ENVIRONMENTAL MEASURES WILL NOT CURB GROWTH IN DOMESTIC STEEL PRODUCTION AND SEABORNE IRON ORE - WOOD MACKENZIE SAYS
Steel plants in China have been targeted as a major source of the toxic smog enveloping Beijing and Shanghai. Emergency measures have been impos ...
Thursday, 27 March 14
PANAMAX : SEEMS TO HEAD FURTHER DOWN; CAPESIZE : ANOTHER CHOPPY AND UNPREDICTABLE WEEK - FEARNLEYS AS
Handy
A weaker sentiment for the smaller size as well, with reduced activity in the Atlantic where Owners have to face significantly lower ret ...
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- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Australian Coal Association
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
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