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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, 16 March 15
MAKING THE WORLD GO ROUND - SEABORNE TRADE! - CLARKSONS
Money, or even love if you prefer, are claimed to make the world go round. For the shipping world, however, it’s trade that sets things spinn ...
Monday, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
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- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Economic Council, Georgia
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
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