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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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Wednesday, 21 October 15
RUSSIA'S CARBO ONE COAL SALES TO HIT 50 MLN T/YR - JACQUELINE HOLMES
COALspot.com: Russia's Carbo One has become one of the world's leading physical coal traders with an annual volume approaching 50 million t ...
Wednesday, 21 October 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In today’s dry bulk market, both freight rates and asset prices are creating mixed feelings to seasoned ship owners, who tend to instinctivel ...
Wednesday, 21 October 15
INDONESIAN COAL MINER BUKIT ASAM POSTS POSITIVE PERFORMANCE DURING FIRST THREE QUARTERS OF 2015
COALspot.com: Indonesian publicly listed and state controlled coal miner PT. Bukit Asam has announced that, the company’s coal sales up 8 per ...
Wednesday, 21 October 15
LOWER DEMAND HIT Q1' 16 INDONESIA COAL SWAPS
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 1.88 (-4.71%) per t ...
Tuesday, 20 October 15
SHIPBROKER SEES CAPESIZE RATES EASILY REACHING $25,000/DAY BY YEAR-END : NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future course of the dry bulk market has been troubling market participants for quite some time now, as the “elusive” freight rate ...
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- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Parliament of New Zealand
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
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- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- The University of Queensland
- Australian Coal Association
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- White Energy Company Limited
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
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