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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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Wednesday, 17 December 14
MARKET INSIGHT - INTERMODAL SHANGHAI, SNP TEAM
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing t ...
Tuesday, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
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- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Economic Council, Georgia
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- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
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- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- PTC India Limited - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Planning Commission, India
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
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