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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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Saturday, 06 April 19
AUSTRALIA COAL POSTS BIGGEST WEEKLY DROP IN A DECADE AMID WEAK DEMAND - REUTERS
Australian thermal coal prices this week registered their biggest weekly fall since the financial market turmoil of a decade ago as demand plunged ...
Saturday, 06 April 19
SUPRAMAX: IT WAS A POOR WEEK OVERALL FOR THE BALTIC SUPRAMAX INDEX, WHICH LOST GROUND - BALTIC BRIEFING
Capesize
The Capesize market over the past week looked to have found a floor on Tuesday with the BCI 5TC at $3460 before firming into the rest ...
Thursday, 04 April 19
OVERSUPPLY STILL MAJOR CHALLENGE WARNS ICS
Speaking in Istanbul, Simon Bennett, Deputy Secretary General of the International Chamber of Shipping (ICS) warned that avoiding overcapacity and ...
Thursday, 04 April 19
GLENCORE, TOHOKU ELECTRIC SET COAL CONTRACT PRICE AT $94.75/T - SOURCE, REUTERS REPORTED
Global miner Glencore and Japan’s Tohoku Electric Power agreed on a price of $94.75 per tonne for supplies of thermal coal from Australia for ...
Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This i ...
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- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Romanian Commodities Exchange
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- The University of Queensland
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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