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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, 25 February 14
SGX'S MONTHLY VOLUMES DRASTICALLY INCREASED AND REACHED A RECORD OF 810K TONNES YEAR-ON-YEAR
COALspot.com: SGX Thermal Coal derivatives started the new year with record volumes in January on the back of higher volatility, says SGX.
Accord ...
Monday, 24 February 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with slo ...
Monday, 24 February 14
INDONESIAN SUB-BITUMINOUS COAL SWAP FOR DELIVERY APRIL - JUNE 2014 SLIDES TO $ 58.60 PMT
COALspot.com – Indonesia, the world’s the largest exporter of the thermal coal's swaps for delivery April - June 2014 slide week ended ...
Monday, 24 February 14
Q1 2015 DELIVERY COAL SWAP CLOSED AT 2.62% HIGHER THAN Q2 2014 CLOSING SWAPS
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 2.68 percent month on month and closed at US$ 76.20 per mt as on Fr ...
Saturday, 22 February 14
SHIPPING POISED TO RALLY AFTER SEVERAL WEEKS OF DROP
COALspot.com: The freight market was steady to firm with the dry bulk index up by 6.24 pct closing at 1,175 points week on week and the cape index w ...
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- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Australian Coal Association
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
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