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