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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, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
Sunday, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
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- MS Steel International - UAE
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Planning Commission, India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
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