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