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