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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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Thursday, 15 September 16
INDONESIA MAY FACE A COAL CRISIS BY 2035!
COALspot.com: Indonesia is the world’s fourth-largest coal producer and the world’s largest thermal coal exporter may face a coal crisi ...
Thursday, 15 September 16
CAPESIZE: LAST WEEK ENDED ON A VERY STRONG NOTE MAINLY DRIVEN BY A ACTIVE BRAZIL MARKET - FEARNLYS
Supramax
With holidays in the eastern hemisphere beginning this week, the sentiment and activity level has been decreasing.
In the Pacific, ...
Wednesday, 14 September 16
THE DRY BULK MARKET REACHED LEVELS LAST SEEN BACK IN 2015 - INTERMODAL
In an earlier column we commented that we are undergoing “shipping’s new (ab)normal” with constrained financing, shift in demand ...
Wednesday, 14 September 16
THE PORT OF NEWCASTLE SHIPPED 12.48 MMT OF COAL IN AUGUST; AVERAGE SELLING PRICE WAS $AU 83.33
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU $1,040.4 ...
Tuesday, 13 September 16
CAPESIZE: BIG STRENGTH SEEN IN THE MARKET THIS WEEK - ALLIED
Capesize - Big strength seen in the market this week, with an upbeat in sentiment amongst owners helping pull up rates fairly quickly and many hold ...
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- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Planning Commission, India
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Medco Energi Mining Internasional
- The University of Queensland
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
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