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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, 11 March 15
RICHARDS BAY COAL SWAPS DROP $ 3.65 - 4.0/T W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has fell US$ ...
Wednesday, 11 March 15
DRY BULK MARKET CLOSED OFF ON THE GREEN FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The Dry Bulk market closed off on the green for a second week in a row, while the performance of Capesizes hindered a more substantia ...
Wednesday, 11 March 15
MARKET INSIGHT : NEWBUILDINGS - PANOS TSILINGIRIS
From a cost-based, buy-low perspective, there is currently a buying opportunity in the second-hand dry bulk market. I am an anti-cyclical (buy-low) ...
Wednesday, 11 March 15
DRY BULK MARKET: ALL IS NOT LOST FOR A RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The low cost of commodities across the board could trigger an increase of trade among many countries, which in turn could lead to a recovery of the ...
Wednesday, 11 March 15
U.S. ELECTRIC GENERATING COMPANIES TO ADD MORE THAN 20 GW OF GENERATING CAPACITY IN 2015; 16 GW OF GENERATING CAPACITY IS EXPECTED TO RETIRE IN 2015
COALspot.com: In 2015, electric generating companies in U.S. expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the ...
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- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Economic Council, Georgia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Australian Coal Association
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
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