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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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Wednesday, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
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- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
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- New Zealand Coal & Carbon
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- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- White Energy Company Limited
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- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
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- Mjunction Services Limited - India
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- Central Electricity Authority - India
- Romanian Commodities Exchange
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- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Parliament of New Zealand
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- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
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- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
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- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Australian Coal Association
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
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