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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, 16 September 13
WHAT RECOVERY MEANS FOR THE CAPESIZE MARKET - COMMODORE RESEARCH
COALspot.com: The simple fact that capesize rates have been able to increase above the $9,000/mark and become much more responsive to changes in car ...
Monday, 16 September 13
CFR SOUTH CHINA COAL SWAP: STABLE TO STEADY
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Monday, 16 September 13
INDONESIAN SUB-BIT COAL SWAP STRUGGLING TO FINDS THE RIGHT PATH
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 0.75 percept month on month on Friday 13 Septe ...
Sunday, 15 September 13
CAPE FREIGHT RATES RISE ON HIGH DEMAND AND TIGHT AVAILABILITY - CAPT. REDDY
COALspot.com : The BDI, Cape and Panamax indices are continued to rise and saw a steep surge with average index in these segments up around 25 pct w ...
Friday, 13 September 13
US COAL OUTPUT SLIPS 3.34% ON-WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.20 million short tons (mmst) of ...
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- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
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- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
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- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
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- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Parliament of New Zealand
- PTC India Limited - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- The University of Queensland
- Aditya Birla Group - India
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
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