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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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Monday, 11 May 15
API 5 FOB NEWCASTLE COAL SWAP; INCREASED M-O-M; DECLINED W-O-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.62 per MT (1.41%) month over month and lost US$ 0.88 week on w ...
Monday, 11 May 15
CFR SOUTH CHINA COAL SWAP: DECLINED MOM AND WOW
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 0.46 (-0.90%) per MT month over month and US$ 0.28 (0. ...
Monday, 11 May 15
KOREA MIDLAND POWER INVITES BIDS FOR 140K MT OF 4600 NAR COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued a new tender to buy total 140,000 Metric Tons (MT) of Sub-bitumi ...
Sunday, 10 May 15
FREIGHT RATES TO REMAIN SOFT NEXT WEEK
COALspot.com: The freight market was flat to soft week over week except for the Cape Index which was up 7.32%. Cape index was closed at 616 p ...
Friday, 08 May 15
BUSIEST CAPESIZE DEMOLITION MARKET EVER - BIMCO
The activity on the demolition market is off to a good start in 2015 when looking at dry bulk tonnage.
The dry bulk market has long suffered f ...
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- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- PTC India Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- ASAPP Information Group - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
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