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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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Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
Thursday, 19 November 15
Q3' 16 RICHARDS BAY COAL SWAP CLOSED 9% LOWER THAN Q1' 16 DELIVERY PRICE
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up week over week and month over month.
The Q1’ 2016 swa ...
Thursday, 19 November 15
RATES FOR CAPES KEPT MOVING SOUTH - INTERMODAL
COALspot.com: With the BDI currently standing at less than 30 points above the historical lows marked in February this year and with activity acros ...
Wednesday, 18 November 15
MARKET (SHIPPING) INSIGHT - THEODORE NTALAKOS
Supply VS Demand
According to data from the IMF, global growth for 2015 is projected at 3.1 percent, 0.3 percentage point lower than in 2014, ...
Tuesday, 17 November 15
KOMIPO INVITES BIDS FOR (SEMI) ANTHRACITE COAL FOR SEOCHEON POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 70,000 Metric Tons of (Semi) Anthracite for Ja ...
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- Sinarmas Energy and Mining - Indonesia
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- OPG Power Generation Pvt Ltd - India
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- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
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- Deloitte Consulting - India
- Economic Council, Georgia
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- Power Finance Corporation Ltd., India
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- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- MS Steel International - UAE
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- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
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- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
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- Thiess Contractors Indonesia
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- Independent Power Producers Association of India
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- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Aditya Birla Group - India
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- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
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- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
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- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
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- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Parliament of New Zealand
- Romanian Commodities Exchange
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- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
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- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
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- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- White Energy Company Limited
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- The University of Queensland
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- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
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- Interocean Group of Companies - India
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