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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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Sunday, 29 September 13
SUB-BIT INDONESIA COAL SWAP FELL ON MONTH AND WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 3.93 percept month on month on Friday 27 September 2 ...
Friday, 27 September 13
TAIWAN'S FORMOSA TO IMPORT 140K MT OF BITUMINOUS COAL FOR Q4
COALspot.com : Taiwan's Formosa Plastics Group is inviting bids for 140,000 mt of bituminous coal for delivery in the Q4 for its China plant.
Ac ...
Friday, 27 September 13
CAPESIZES REGAINING PART OF THEIR FORMER GLORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The latest dry bulk market rally has been nothing short of spectacular, with freight rates more than doubling over the past few weeks. This growth h ...
Friday, 27 September 13
US PRODUCED 19.30 MMST OF COAL IN SEVEN DAYS
COALspot.com – United States the world’s second largest coal producer produced approximately 19.30 million short tons (mmst) of coal in ...
Thursday, 26 September 13
PANAMAX MARKET CONTINUE WITH STRONG RATES IN BOTH BASINS - FEARNRESEARCH
Handy
Feast rates are still firm, some fresh stems entered the market. Vessels trading around $15k passing Singapore for coal to India, and a bit l ...
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- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
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