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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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Tuesday, 18 March 14
SECOND QUARTER SUB-BIT FOB INDONESIA COAL SWAP LOST 3.27% IN A MONTH
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 gained this pa ...
Tuesday, 18 March 14
NEWCASTLE COAL EXPORT VOLUME FALLS 26.23% WEEK ON WEEK
COALspot.com: In the week ended 17 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 17 March 14
API 8 CFR SOUTH CHINA COAL SWAPS FOR AVERAGE Q2 14 DELIVERIES LOST 2.59% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 2.59 percent month on month and closed at US$ 74.15 per mt as o ...
Sunday, 16 March 14
BDI DOWN ON LOW CAPESIZE ACTIVITY
COALspot.com: The freight market was slightly soft this week with BDI down by 4.28 pct week on week. The BDI closed at 1,477 points and the cape ...
Friday, 14 March 14
DRY BULK MARKET ENTERS RECOVERY MODE, ON INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has entered and sustained higher ground as of this week, on the back on increased Capesize demand. Although the situation in ...
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- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Parliament of New Zealand
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
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