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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, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
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- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
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