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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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- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
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