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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, 27 January 14
Q3 2014 SUB-BIT INDONESIA COAL SWAP LOST GROUND, ENDS AT $60 PMT
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost 2.29% pmt month on month on Friday 24 January 2014. Th ...
Sunday, 26 January 14
FREIGHT RATES FALL FURTHER ON LACK OF CARGOES - SOLYM CARRIERS
COALspot.com: The freight market has continued to soften further this week with BDI down by 12.31 pct. BDI was closed at 1,246 points week ended 24 ...
Friday, 24 January 14
US COAL PRODUCTION UP 3.9% ON WEEK IN WEEK ENDED SATURDAY - EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.1 million short tons (mmst) of coal in ...
Friday, 24 January 14
DRY BULK MARKET STRUGGLING TO FIND FIRM FOOTING IN START OF 2014 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been faltering since the start of 2014, struggling to hold its ground as low seasonal demand has hindered further growth in ...
Thursday, 23 January 14
PANAMAX : THIS WEEK THE ACTIVITY CAME DOWN DRAMATICALLY - FEARNRESEARCH
Handy
With the Chinese New Year approaching the activity and rate levels are sliding in both hemispheres. Rates in the Atlantic have knocked off so ...
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- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Planning Commission, India
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- PTC India Limited - India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
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