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