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