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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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Tuesday, 06 September 16
INDO GOVT. SETS SEPTEMBER COAL REFERENCE PRICE AT US$ 63.93 PER TON; JUMP 20.17% YTD
COALspot.com: The Indonesia coal benchmark price hits to its highest level since April 2015. The government declared benchmark prices f ...
Tuesday, 06 September 16
CAPESIZE: THE PACIFIC BASIN WAS THE MAIN REGION KEEPING UP WITH THE POSITIVE SUPPORT - ALLIED
Capesize
Despite some mixed feelings being seen early on in the week, we managed to see a positive week-on-week close on Friday with some positiv ...
Monday, 05 September 16
INDIA BECAME ADARO'S SECOND LARGEST MARKET IN 1H' 16
COALspot.com: The Wara Balangan blend product has been well received by customers in China and India - AI
In the second quarter of 2 ...
Monday, 05 September 16
POOR FREIGHT RATES DESPITE STRONG DEMAND GROWTH FROM CHINA - BIMCO
Demand
The dry bulk commodity imports into and exports out of China we have seen in the first half of 2016 are very positive – and nothing ...
Monday, 05 September 16
FREIGHT RATE FROM INDONESIA TO INDIA IS EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week except ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- PTC India Limited - India
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
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