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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, 08 January 16
DRY BULK MARKET'S CRISIS DEEPENS AS RATES ARE DROPPING TO NEW RECORD LOWS BY THE DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Just when you would think that the dry bulk market is reaching its bottom, even as it has long surpassed all-time lows, each day that passes by at ...
Thursday, 07 January 16
FOB NEWCASTLE COAL SWAPS DELIVERY Q1'16 REMAIN FLAT W-O-W; UP M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.23 per ton (3.35%) this past week compared to the sam ...
Thursday, 07 January 16
SHIPPING WILL REMAIN VOLATILE AND INDISPENSABLE IN 2016 - MOORE STEPHENS
The ultimate definition of an optimist has been characterised as an accordion player with an answerphone. Such extreme optimism might be difficult ...
Wednesday, 06 January 16
NEW COAL PRICE PASS-THROUGH REGULATION BENEFITS CHINA IPPS - FITCH RATINGS
Fitch Ratings says the new Coal Price Pass-through Mechanism announced by the National Development and Reform Commission (NDRC) on 31 December ...
Tuesday, 05 January 16
BIG COAL MINERS PLAN HIGHER PRODUCTION THIS YEAR - THE JAKARTA POST
The country’s major coal miners plan to further boost production in 2016 although analysts estimate that an oversupply in the world’s c ...
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- Planning Commission, India
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
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