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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, 26 May 14
SUB-BIT FOB INDO COAL SWAP Q1' 15 DELIVERIES CLOSED AT US$ 59.40 PER MT
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
Monday, 26 May 14
Q3 14 CFR SOUTH CHINA COAL SWAPS LOST 2.24% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.24 percent month on month and closed at US$ 73.88 per mt as on F ...
Monday, 26 May 14
NEWBUILDING ORDERING ACTIVITY RISES BY 78% IN DWT TONNAGE OVER THE FIRST 4 MONTHS OF THE YEARS, AS OWNERS INVEST$40.5 BN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have plunged into newbuilding orders during the first four months of the year, as overall newbuilding business ended for the first four ...
Sunday, 25 May 14
FREIGHT RATES FROM SOUTH KALIMANTAN TO EAST COAST INDIAN PORTS WERE ASSESSED AT $9.50/MT
COALspot.com: The BDI was closed at 964 points down by 6.13 pct week on week. The Cape Index was lost 172 points or 11.24% week on week and closing ...
Saturday, 24 May 14
DRY BULK MARKET'S RECOVERY IS JUST AROUND THE CORNER SAYS SHIPOWNER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the weaker than expected market sentiment in the dry bulk market over the course of the past few months, analysts and shipowners alike appe ...
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- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- The University of Queensland
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Malabar Cements Ltd - India
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