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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, 30 April 15
IRON ORE EXPORTS: A DANGEROUS RACE? - CLARKSONS
The surge in iron ore exports in recent years has resulted in a significant decrease in iron ore spot prices, which dipped to a ten year low of bel ...
Thursday, 30 April 15
IRON ORE PLAYS EXPECTED TO SHAPE UP MAY DRY BULK SCHEDULE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Market plays in the iron ore commodities’ markets, are expected to carve out the future demand for the shipping industry as well, said Allied ...
Wednesday, 29 April 15
MARKET INSIGHT - INTERMODAL
The figures of China’s slowing down imports of coking coal for the first quarter of the year are coming to confirm what everybody was expecti ...
Wednesday, 29 April 15
SHIPBUILDERS START OFFERING DISCOUNTS FOR DRY BULK NEWBUILDINGS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It took a while, but now it appears that some shipbuilders are beginning to adjust their price lists to the new grim reality of the dry bulk market ...
Tuesday, 28 April 15
FOB INDONESIA COAL SWAP DECLINED M-O-M; INCREASED W-O-W
COALspot.com: Indonesian coal swap for delivery Q2 2015 gained week over week but declined month on month.
The Q2 swap was declined US$ 0.15 ( ...
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- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Australian Coal Association
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
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