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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, 24 March 14
SGX'S Q2'14 CFR SOUTH CHINA COAL SWAP CLOSES SLIGHTLY HIGHER W-O-W
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.81 percent month on month and closed at US$ 74.82 per mt as o ...
Sunday, 23 March 14
THE COAL FREIGHT RATES SEEN SLIGHTLY FIRMING UP THIS WEEK - REDDY
COALspot.com: The freight market firmed up this week. BDI was up 8.26 pct week on week and index was closed at 1599 points. The Cape index was u ...
Saturday, 22 March 14
SHIP OWNERS INVEST $15 BILLION FOR NEWBUILDINGS AND SECONDHAND VESSELS DURING FEBRUARY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have kept on their aggressive stance in the investment scene both for newbuildings, as well as for secondhand vessels globally durin ...
Friday, 21 March 14
DRY BULK MARKET STAYS ON RECOVERY MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has reached new year heighs, as a result of renewed Capesize demand. The Baltic Dry Index (BDI) ended yesterday's sessio ...
Friday, 21 March 14
US COAL PRODUCTION UP 1.5%; WEST MISSISSIPPI COAL PRODUCTION DOWN 1.85% WEEK ON WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
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- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Planning Commission, India
- Malabar Cements Ltd - India
- Australian Coal Association
- Goldman Sachs - Singapore
- The University of Queensland
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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