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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, 15 July 13
INDO COAL SWAPS ARE STRUGGLING FOR RIGHT DIRECTION
COALspot.com – Indo coal swaps are struggling to find the right direction. Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 d ...
Friday, 12 July 13
U.S. PRODUCED 18.40 MMST COAL WEEK ENDED 6 JULY 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.40 million short tons (mmst) of ...
Thursday, 11 July 13
PANAMAX: PACIFIC ROUND PAY AROUND $6,500/D; ATLANTIC ROUND VOYAGE PAY AROUND US$ 10,000/D - FEARNLEYS AS
Handy
The Feast market is quiet, July date cargoes remain unfixed as there is a gap between what owners aiming and charterers willing to pay. There ...
Wednesday, 10 July 13
DRY BULK MARKET IS STILL STRUGGLING TO SURVIVE - INTERMODAL
COALspot.com : With the first half of the year now behind us and, as expected, most shipping segments in the dry bulk market are struggling to survi ...
Tuesday, 09 July 13
COAL PRICE REMAINS SLUGGISH - TRIMEGAH
COALspot.com - Newcastle coal price has reached US$ 76.30/ton (-15.9% YTD), bringing YTD’13 average to stand at US$ 87.90/ton, 6.80% lower tha ...
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- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- White Energy Company Limited
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
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