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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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Tuesday, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
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- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- PTC India Limited - India
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
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