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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, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
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- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
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