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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, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
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- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
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