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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, 01 December 15
TANKERS VERSUS BULKERS - JUST PLAYING CATCH UP? - CLARKSONS
It’s now more than a year since the tanker market took off. In mid-2014 tanker earnings picked up and since then have been in the $30-$40,000 ...
Monday, 30 November 15
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
ASSOCARBONI is in favour of an international mechanism to provide financial support to countries building high efficiency low emission coal plants. ...
Monday, 30 November 15
CS 5000 GAR COAL INDEX FIRM D-O-D; WEAK W-O-W
COALspot.com: The 5000 GAR CS (i) coal index up slightly day over day.
According to the system generated index, the CS 50 (5000 GAR coal) was ...
Monday, 30 November 15
CFR SOUTH CHINA COAL SWAPS REMAINED UNCHANGED FROM LAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.50 (9.78%) per ton month over month.
A commodity swap ...
Sunday, 29 November 15
CAPE INDEX SURGES 383 POINTS WEEK OVER WEEK, BOOSTS BALTIC DRY INDEX
COALspot.com: The Baltic Dry Index, a measure of shipping rates, fell to 498 points on 20 November and touched a 30-year low, but on 27 November th ...
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- Bukit Makmur.PT - Indonesia
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- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- The University of Queensland
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
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- Thiess Contractors Indonesia
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- Planning Commission, India
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- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
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- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
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- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
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- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
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- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
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- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- PTC India Limited - India
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
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- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
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- India Bulls Power Limited - India
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- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
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- Orica Australia Pty. Ltd.
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- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
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- Indian Energy Exchange, India
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- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Australian Coal Association
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
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- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Economic Council, Georgia
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
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- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
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