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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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Sunday, 01 July 12
DSP OF SGX ASIACLEAR OTC COAL SWAP'S THIS WEEKS MOVEMENTS SLIGHTLY POSITIVE
COALspot.com - SGX AsiaClear OTC Coal Swaps have recovered slightly this week and Q4 deliveries are also showing positive direction.
SGX’s ...
Saturday, 30 June 12
THE FREIGHT RATES ARE EXPECTED TO BE STEADY TO FIRM NEXT WEEK - VISTAAR SINGAPORE
COALspot.com – The BDI was up by 2.66 pct (up by 26 points) closing at 1,004 points crossing the 1000 point barrier this week.
The c ...
Friday, 29 June 12
INDONESIAN PRODUCERS ARE PLANNING TO CUT PRODUCTION IF COAL PRICES FALL FURTHER
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 31.54* million tons of coal in May 2012, compared to 31.86* mill ...
Friday, 29 June 12
DRY BULK SHIP OWNERS DOING THEIR MATHS BEFORE PLACING NEWBUILDING ORDERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With oversupply having plagued the dry bulk shipping fleet since the end of 2011, it’s become ever so evident that placing a newbuilding order ...
Thursday, 28 June 12
DRY BULK MARKET HIGHER ON CAPESIZE OPTIMISM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched a bit higher yesterday, as the BDI (Baltic Dry Index) ended up by 0.71% to 988 points. Most ship types were up, with the ...
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- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- The University of Queensland
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Planning Commission, India
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
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