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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, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
Monday, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
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- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- VISA Power Limited - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
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