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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, 16 April 15
SHIPPING DEMAND TO SUFFER AS CHINESE SLOWDOWN CONFIRMED SAYS BIMCO'S CHIEF SHIPPING ANALYST - BIMCO
The Chinese economy grew by 7.0% y-o-y in the first quarter of 2015, according to National Bureau of Statistics in China. This is the weakest overa ...
Thursday, 16 April 15
INDIA: COAL IMPORTS RISE BY 33 PC TO 240 MT IN FY'15 - PTI
India’s coal imports in the just concluded FY 2015 increased by 33 per cent to about 240 million tonnes.
“Coal import have gone up ...
Thursday, 16 April 15
CAPESIZE: THE SUPPLY AND DEMAND SIDE ARE NOW SUFFERING HEAVILY - FEARNLEYS
Handy
It seems to be some standoff between owners and charterers in both hemispheres this week. Owners are raising their rates while charterers a ...
Thursday, 16 April 15
Q3 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 55.67 PMT
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month.
The Q2 swap has declined US$ 1.90 (3.17%) m ...
Wednesday, 15 April 15
PORT OF NEWCASTLE SHIPPED 13.63 MMT OF COAL IN MARCH; UP 4.41% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.227 billi ...
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- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Parliament of New Zealand
- Deloitte Consulting - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- The University of Queensland
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- PTC India Limited - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- White Energy Company Limited
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Electricity Authority, New Zealand
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