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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, 30 June 14
WEEKLY CFR SOUTH CHINA COAL SWAPS DECLINE CONTINUES; Q1'15 LOST US$ 4.55 PMT IN A WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in Q3 fell US$ 5.25 month on month on Friday, dipping under $69 a tone. The CFR South Ch ...
Monday, 30 June 14
INDO - INDIA FREIGHT RATES CONTINUE TO WEAK
COALspot.com: The latest dry Index shows that average all-in spot freight declined, the Panamax and Supramax slipping by 9.11 percent and 4% respec ...
Friday, 27 June 14
DRY BULK MARKET STILL LOOKING FOR UPSIDE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept up its lacklustre performance during the past week, as evidenced by the course of the Baltic Dry Index (BDI). The BDI ...
Thursday, 26 June 14
PANAMAX : A PACIFIC ROUND PAYS AROUND US$ 3K DAILY - FEARNLEYS AS
Handy
In the Atlantic there has been little activity which again has caused rates to slip across all trades. TA´s are now down to US$ 5,500 ...
Thursday, 26 June 14
KOMIPO INVITES BIDS FOR TOTAL 750K MT OF BITUMINOUS COAL FOR 3CY
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) has issued a new tender for supply of total 250,000 MT of bituminous co ...
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- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
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