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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 April 13
SUB - BIT INDONESIA COAL SWAP SHOWS POSITIVE TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 2.70 percent and CFR South China coal shipment&nbs ...
Saturday, 13 April 13
THE FREIGHT MARKETS EXPECTED TO HOLD FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - This freight market firmed up this week and all sectors were up except for Supramax index.
The BDI was up by 1.62 pct closing at 8 ...
Friday, 12 April 13
DRY BULK SHIP OWNERS DEVELOPED NEWFOUND APPETITE FOR BULKERS DURING FIRST QUARTER OF 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's official; more and more ship owners operating in the dry bulk market appear to have developed a newfound optimism in the market's prospects. ...
Thursday, 11 April 13
HANDY: INDO - INDIA NOW BEEN REPORTED AT APS BASIS AT USD 10K+BB 85K - FEARNLEYS
Handy
The Atlantic markets remain with not many cargoes seen this week. The USG-Feast was at USD 18k and Black Sea-Feast was at USD 12k. The Pacifi ...
Thursday, 11 April 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 15.96 PERCENT LESS COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 2,545,914 tons of thermal and coking coal for week ended 0700 hours 8 April 2013, Newcas ...
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- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
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