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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, 22 April 15
TANKER MARKET INSIGHT - STRATOS TINIAKOS
The current environment we experience as a result of low crude oil prices is characterized by the increased demand for petroleum products in OECD c ...
Tuesday, 21 April 15
SUB-BIT FOB INDONESIA COAL SWAP: GAINED W-O-W; DECLINED M-O-M
COALspot.com: Indonesian coal swap for delivery Q2 2015 gained week over week and declined month on month.
The Q2 swap was declined US$ 1.75 ( ...
Tuesday, 21 April 15
FOB RICHARDS BAY COAL SWAP MOVE UP SLIGHTLY
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q2' 2015 increased slightly month over month.
The Q2 swap has increased US$ 0.2 ...
Monday, 20 April 15
BUKIT ASAM TAKES OVER STAKE IN JV FROM RAJAWALI - JP
State-owned coal miner PT Bukit Asam (PTBA) announced Friday that it had taken over almost the entire stake in a joint venture (JV) that it created ...
Monday, 20 April 15
FOB NEWCASTLE COAL SWAP GAINED WEEK ON WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 3.54 per MT (-7.21%) month over month and gained US$ 0.30 week ...
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- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- The University of Queensland
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Australian Coal Association
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
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