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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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Tuesday, 12 February 13
GOVERNMENT DECLARED INDONESIAN THERMAL COAL PRICE INCHES UP IN FEBRUARY
COALspot.com - The Indonesian government has declared bench mark price for coal has moved upwards in February 2013.
The monthly coal refere ...
Monday, 11 February 13
NEWCASTLE PORT SHIPPED 23.01 PERCENT MORE COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 2,967,761 MT of thermal and coking coal for week ended 0700 hours 11 February 2013, Newc ...
Sunday, 10 February 13
INDONESIA SUB-BIT SWAPS: "UP" - CFR SOUTH CHINA SWAPS: "DOWN"
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 0.72 percent W-O-W and CFR South China coal shipme ...
Sunday, 10 February 13
DRY BULK OVERSUPPLY OF TONNAGE SEEN WANING IN THE COMING MONTHS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It seems that the tide could be shifting in the dry bulk market, in terms of tonnage oversupply, according to the latest data figures. This could ex ...
Sunday, 10 February 13
HIGHER BUNKER PRICE PUSHES SEA FREIGHTS FIRM - REDDY
COALspot.com - The freight market was soft and all at same levels with Chinese year holidays next week.
The BDI was slightly down by 0.27 pct ad ...
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- Cigading International Bulk Terminal - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
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- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
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- Eastern Coal Council - USA
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- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
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- Ceylon Electricity Board - Sri Lanka
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- Samtan Co., Ltd - South Korea
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- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Central Java Power - Indonesia
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- Gujarat Electricity Regulatory Commission - India
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- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
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- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
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- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
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- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
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- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
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- GAC Shipping (India) Pvt Ltd
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- Chamber of Mines of South Africa
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- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
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- PowerSource Philippines DevCo
- Indika Energy - Indonesia
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- Planning Commission, India
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- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
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- VISA Power Limited - India
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- AsiaOL BioFuels Corp., Philippines
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- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Minerals Council of Australia
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- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
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- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
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- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
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