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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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- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- PTC India Limited - India
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
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