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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, 17 June 12
S7 & S8 ROUTES ARE LIKELY TO BE SOFT NEXT WEEK - VISTAAR
COALspot.com - The BDI gained some increase after continues fall for several weeks.
The BDI increased by 47 points (up by 5.36 pct) closing at 92 ...
Saturday, 16 June 12
INDONESIAN SUB-BITUMINOUS COAL & CFR SOUTH CHINA COAL CONTRACT SWAPS ARE UNDER PRESSURE
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for July deliveries seems to be under pressure this week.&nbs ...
Friday, 15 June 12
CAPESIZE - THE LEVELS THAT DID FIX ARE DOWN W-O-W LEVELS - FEARNLEYS
Handy
Another slow-moving market with rates hovering at same level as last week. US Gulf positions fixed USD 25,000 for trips to Cont/Passero and S ...
Thursday, 14 June 12
SMALLER DRY BULK CARRIERS LIKELY TO FACE MORE CHALLENGES; DEMOLITION ACTIVITY SET FOR RECORD YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest update on the dry bulk markets, BIMCO said that China is partly “failing to deliver” on raw material imports that can affe ...
Wednesday, 13 June 12
LOW COAL PRICES COULD CHANGE SUPPLY SIDE DYNAMICS - FITCH RATINGS
Fitch Ratings believes that the weakness seen in thermal coal prices in recent months should reverse once demand from major importers recovers, alth ...
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- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Economic Council, Georgia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Planning Commission, India
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
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