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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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- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- MS Steel International - UAE
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
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