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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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Monday, 12 September 16
THE CAPE MARKET HAS GAINS ON WEEK; THE CAPE INDEX SETTLING AT 1566 POINTS ON FRIDAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
Friday, 09 September 16
U.S. WEEKLY COAL OUTPUT DECLINED SLIGHTLY TO 16.1 MMST, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Friday, 09 September 16
CAPESIZE: THE SENTIMENT IS SOLID, SAYS FEARNLEYS
Supramax
A quiet start with Labour Day celebrations in the United States leading to very little being reported from the Atlantic basin. Supramaxe ...
Thursday, 08 September 16
U.S. COAL EXPORTS IN JUNE 2016 UP 29% COMPARED TO MAY 2016, SAYS EIA
U.S. coal production in August was 71 million short tons (MMst), which is 6 MMst (9%) higher than in the previous month and 12 MMst (14%) lower tha ...
Wednesday, 07 September 16
WEEKLY MARKET (TANKER) REPORT - INTERMODAL
What goes around comes around! The Shipping industry is infamous for its seasonality and cyclicality and the tanker sector is no exception to these ...
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- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- The University of Queensland
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Australian Coal Association
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
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