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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, 17 September 15
LOW DEMAND PUSH COAL SWAP DOWN
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and gain week over week.
The 4Q swap declined $ 1.77 (-4.17%) ...
Thursday, 17 September 15
MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
Having experienced, as it was much anticipated, a poor 1st half combined with negative forecasts, summer, in sharp contrast, proved to be more hope ...
Wednesday, 16 September 15
SLOWER GROWTH IN WORLD COAL DEMAND AND LOWER INTERNATIONAL COAL PRICES LED A DECLINE IN INDONESIAN COAL PRODUCTION
COALspot.com: Slower growth in world coal demand particularly China and lower international coal prices have led to a decline in Indonesian coal pr ...
Wednesday, 16 September 15
HIGHER TAXES COULD LEAD GREEK SHIP OWNERS OUT OF THE COUNTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
A potential taxation overhaul of the shipping industry in Hellas, which could see the loss of particular tax benefits for ship owners, could lead t ...
Tuesday, 15 September 15
WORLD SEABORNE TRADE: ENTERING INTO A ROLE REVERSAL? - CLARKSONS
Over the past decade, world seaborne trade growth has been dominated by dry bulk and container trade. However, developments in the global economy t ...
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- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Planning Commission, India
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
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