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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, 17 February 14
Q1 2015 COAL SWAPS CLOSED $ 2.21 HIGHER THAN Q2 2014 SWAPS
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 delivery lost 3.16 percent month on month and closed at US$ 76.12 per mt as o ...
Sunday, 16 February 14
SUPRAMAX : THE FAR EAST/SE ASIA CHARTER RATES FIRMED UP
COALspot.com: The freight market had a mixed reaction this week with BDI increased by 1.37 pct and closing at 1106 points on Valentine day. The cape ...
Friday, 14 February 14
US COAL PRODUCTION STILL SLIPPING
COALspot.com – United States the world’s second largest coal producer, produced approximately 17.9 million short tons (mmst) of coal in ...
Thursday, 13 February 14
PANAMAX : NOT ENOUGH REQUIREMENTS TO KEEP THE ATLANTIC MARKET FLOATING - FEARNLEYS AS
Handy
After the Chinese holidays the week started on a positive note. Owners are talking higher rates but chrtrs are still somehow reluctant to mov ...
Thursday, 13 February 14
DRY BULK MARKET FACES BETTER PROSPECTS ON THE BACK OF IMPROVING DEMAND AND SUPPLY BALANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has started off the New Year on the "left foot", with the strong finish of 2013 proving to be unsustainable, on the ba ...
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- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Aditya Birla Group - India
- ASAPP Information Group - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Australian Coal Association
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