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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, 24 March 14
SGX'S Q2'14 CFR SOUTH CHINA COAL SWAP CLOSES SLIGHTLY HIGHER W-O-W
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.81 percent month on month and closed at US$ 74.82 per mt as o ...
Sunday, 23 March 14
THE COAL FREIGHT RATES SEEN SLIGHTLY FIRMING UP THIS WEEK - REDDY
COALspot.com: The freight market firmed up this week. BDI was up 8.26 pct week on week and index was closed at 1599 points. The Cape index was u ...
Saturday, 22 March 14
SHIP OWNERS INVEST $15 BILLION FOR NEWBUILDINGS AND SECONDHAND VESSELS DURING FEBRUARY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have kept on their aggressive stance in the investment scene both for newbuildings, as well as for secondhand vessels globally durin ...
Friday, 21 March 14
DRY BULK MARKET STAYS ON RECOVERY MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has reached new year heighs, as a result of renewed Capesize demand. The Baltic Dry Index (BDI) ended yesterday's sessio ...
Friday, 21 March 14
US COAL PRODUCTION UP 1.5%; WEST MISSISSIPPI COAL PRODUCTION DOWN 1.85% WEEK ON WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
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- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Australian Coal Association
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
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