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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, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
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- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
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