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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, 06 August 14
CAPES: BUSINESS INTEREST REMAINS SOFT; CURRENTLY NO SIGNS OF IMPROVEMENT - INTERMODAL
COALspot.com: Despite the considerable pressure witnessed in the freight market for most of the size segments, the Dry Bulk Index was able to note ...
Wednesday, 06 August 14
SHIPPING MARKET INSIGHT - EVA TZIMA
Recent reports that Indonesia’s ban on exports of metal ore concentrates was lifted for the first time in six months for two of its biggest m ...
Wednesday, 06 August 14
SGX SUCCESSFULLY LAUNCHED NEW SGX COAL PRODUCTS
COALspot.com: Singapore Exchange (‘SGX’) has announced that, the exchange has successfully launched its new Coking and Thermal Coal pro ...
Monday, 04 August 14
ANNUAL SECOND HALF SURGE IN BRAZILIAN IRON ORE EXPORTS ABOUT TO BEGIN - JEFFREY LANDSBERG
COALspot.com: Great strength in the capesize market has all along been set to occur during the second half of this year, as that is when Brazilian ...
Monday, 04 August 14
SUB-BIT FOB INDONESIA COAL SWAP INCHES UP DESPITE LOW DEMAND
COALspot.com: Indonesian coal swaps for average Q4’ 2014 increased US$ 0.15 day on day and US$ 0.13 per mt week on week. But, the swap was lo ...
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- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Australian Coal Association
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
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