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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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- Central Electricity Authority - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
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