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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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Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
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- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- VISA Power Limited - India
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Wilmar Investment Holdings
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