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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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Friday, 02 September 16
EIA FORECASTS U.S. COAL EXPORTS TO DECLINE BY 19 MMST IN 2016 TO 55 MMST
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.3 million sho ...
Thursday, 01 September 16
SUPRAMAX GETTING LEVELS OF MID/HIGHER 7K DELIVERY SINGAPORE FOR TRIPS TO CHINA AND AROUND 9K FOR DIRECTION INDIA - FEARNLEYS
Supramax
This week started slower with London on bank holiday Monday. The south east Asian market seems to have been taking a breather with chart ...
Thursday, 01 September 16
AUSTRALIA'S NEWCASTLE PORT SHIPPED 2.33 PERCENT MORE COAL IN JULY
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU 1.10 bill ...
Wednesday, 31 August 16
THE DRY BULK MARKET MANAGED TO FIND FURTHER SUPPORT DURING THE LAST DAYS OF THE SUMMER SEASON - INTERMODAL
The Dry Bulk market managed to find further support during the last days of the summer season, with the BDI climbing above 700 last Friday, reachin ...
Tuesday, 30 August 16
THE SUDDEN SURGE IN IRON ORE TRADE HAS CREPT UP ON THE MARKET THIS PAST WEEK - GEORGE LAZARIDIS
The sudden surge in Iron ore trade has crept up on the market this past week bringing about a change in the prospects for Capes. Continued increase ...
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- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- PTC India Limited - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Planning Commission, India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
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