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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, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
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- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
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