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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, 03 February 14
SUB-BIT INDONESIA COAL SWAP GAINED WEEK ON WEEK
COALspot.com – Swaps prices gained for thermal coal loading from Indonesia, the world’s largest exporter of the fuel, according SGX.
...
Monday, 03 February 14
API 8 CFR SOUTH CHINA COAL SWAP CONTRACTS FALL
COALspot.com: API 8 CFR South China Coal swaps for average Q1 14 delivery lost 4.71 percent month on month and closed at US$ 78.87 per mt as on Frid ...
Monday, 03 February 14
COAL FREIGHT RATES REMAIN UNDER PRESSURE
COALspot.com: The BDI is fell 50 pct over last one month which seems to be one of the lowest fall in last few years.
The BDI was down by 11 ...
Friday, 31 January 14
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 19.2 MMST W-O-W
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.2 million short tons (mmst) of coal in ...
Friday, 31 January 14
DRY BULK MARKET STILL ON A FALL, EXPECTED TO WORSEN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is definitely in the doldrums since the start of the year, in what could only be described as a "lost" month for indus ...
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- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
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- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- GMR Energy Limited - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
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- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
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- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
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- Power Finance Corporation Ltd., India
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- Wood Mackenzie - Singapore
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- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
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- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
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- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
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