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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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Thursday, 11 April 13
TNEB HAS OPENED 4.2 MILLION TONS IMPORTED COAL TENDER
COALspot.com - TANGEDCO, the state run utility TANGEDCO (formerly known as TNEB), Tamil Nadu state owned electricity company has opened bids to purc ...
Wednesday, 10 April 13
US COAL CONSUMPTION TO INCREASE FROM 889 MMST IN 2012 TO 948 MMST IN 2013 AND 957 MMST IN 2014 - EIA
Based on estimates for the first quarter of 2013, American coal production has continued to decline.
Total production is down 9.9 million short t ...
Wednesday, 10 April 13
DRY BULK FREIGHT RATES SEEN MOSTLY STABLE IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
In its latest report, BIMCO forecast that for the coming six weeks, Capesize time charter average rates will remain subdued around $4,500-8,500 per ...
Monday, 08 April 13
SUB-BIT INDONESIA COAL SWAPS: UPWARD TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 2.71 percent and CFR South China coal shipment&nbs ...
Sunday, 07 April 13
CHARTER RATES ARE UNDER PRESSURE DUE TO DECLINING DEMAND - VISTAAR
COALspot.com - The freight market continued to fall further with all the indices down.
The BDI was down by 5.38 pct closing at 861 points and the ...
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- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- White Energy Company Limited
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
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