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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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Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
Tuesday, 04 March 14
HIGHER PRICES AND STEADY FREIGHT RATES LEAD SHIP OWNERS TO TEMPORARILY HALT SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market has kept on improving, but at a very slow rate, ship owners have elected to take a step back from the flurry of the S&P m ...
Monday, 03 March 14
SUB-BIT INDONESIA COAL SWAP (FOB) FOR AVERAGE Q115 CLOSED AT $60.28, $ 1.70 HIGHER THAN 2Q14
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slightly corrected do ...
Monday, 03 March 14
API 8 CFR SOUTH CHINA SWAPS: Q4' 2014 DELIVERY CLOSED US$ 1.40 HIGHER COMPARED TO Q2' 2014 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.90 percent month on month and closed at US$ 76.27 per mt as on Fr ...
Monday, 03 March 14
COSTS LIABILITY PASSING DOWN A CHARTERPARTY CHAIN - SKULD
KNOWLEDGE TO ELEVATE
Provided that charterparties are on back to back terms, and the claim is successful, liability for costs incurred shoul ...
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- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- The University of Queensland
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Petron Corporation, Philippines
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Australian Coal Association
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
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