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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, 25 February 14
SGX'S MONTHLY VOLUMES DRASTICALLY INCREASED AND REACHED A RECORD OF 810K TONNES YEAR-ON-YEAR
COALspot.com: SGX Thermal Coal derivatives started the new year with record volumes in January on the back of higher volatility, says SGX.
Accord ...
Monday, 24 February 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with slo ...
Monday, 24 February 14
INDONESIAN SUB-BITUMINOUS COAL SWAP FOR DELIVERY APRIL - JUNE 2014 SLIDES TO $ 58.60 PMT
COALspot.com – Indonesia, the world’s the largest exporter of the thermal coal's swaps for delivery April - June 2014 slide week ended ...
Monday, 24 February 14
Q1 2015 DELIVERY COAL SWAP CLOSED AT 2.62% HIGHER THAN Q2 2014 CLOSING SWAPS
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 2.68 percent month on month and closed at US$ 76.20 per mt as on Fr ...
Saturday, 22 February 14
SHIPPING POISED TO RALLY AFTER SEVERAL WEEKS OF DROP
COALspot.com: The freight market was steady to firm with the dry bulk index up by 6.24 pct closing at 1,175 points week on week and the cape index w ...
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- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Posco Energy - South Korea
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
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