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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, 27 October 14
CFR SOUTH CHINA COAL SWAPS PERFORMED POSITIVE THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 1.68 (-2.55%) month over month and increased US$ 0.87 (+1.3 ...
Sunday, 26 October 14
CAPE'S STRONG PERFORMANCE PUSHES BDI INDEX UPWARDS
COALspot.com: The BDI was up by 26.27 pct and closed at 1192 points week and week. The Cape size performance has pushed up BDI and Cape size index ...
Friday, 24 October 14
WEEKLY U.S COAL PRODUCTION DOWN 2.7% FOR THE WEEK ENDING OCTOBER 18
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.7 million short tons (mmst) of coal in ...
Thursday, 23 October 14
THE BEARS, HOWEVER, STILL CRY; FOR HOW LONG WILL IT LAST? - FEARNLEYS
Handy
"We experience a typical oversupply of ships in the Atlantic which causing rates to slide. In the USG it is just enough cargoes to kee ...
Wednesday, 22 October 14
MARKET INSIGHT - THEODORE NTALAKOS, INTERMODAL
ECO designs - revisited
The ECO vessels are already here but the oil and bunker prices are plummeting to their cheapest level since 2010. Is this ...
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- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- White Energy Company Limited
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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