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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 September 14
CFR SOUTH CHINA COAL SWAP GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 2.30 (-3.36%) month over month, but increased day on day a ...
Sunday, 14 September 14
FREIGHT RATES RALLY AS DEMAND INCREASED
COALspot.com: The Baltic Dry Index (BDI) is a number (in US$) issued daily by the London-based Baltic Exchange up 2.25 percent week on week. BDI cl ...
Friday, 12 September 14
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 673.3 MMST, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Thursday, 11 September 14
THE PANAMAX MARKET IS TAKING A BREATHER - FEARNLEYS
Handy
We have experienced more activity in both hemispheres this week, said Fearnleys in this week's weekly report.
"We see rates c ...
Wednesday, 10 September 14
ARE GREEK BANKS ON THE VERGE TO START LENDING AGAIN? - JOHN N. COTZIAS
It is well known that Greek Banks had suffered severely after the economic crisis of 2008. From that period onwards, major changes have occur ...
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- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Economic Council, Georgia
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Planning Commission, India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
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