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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, 27 January 14
Q3 2014 SUB-BIT INDONESIA COAL SWAP LOST GROUND, ENDS AT $60 PMT
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost 2.29% pmt month on month on Friday 24 January 2014. Th ...
Sunday, 26 January 14
FREIGHT RATES FALL FURTHER ON LACK OF CARGOES - SOLYM CARRIERS
COALspot.com: The freight market has continued to soften further this week with BDI down by 12.31 pct. BDI was closed at 1,246 points week ended 24 ...
Friday, 24 January 14
US COAL PRODUCTION UP 3.9% ON WEEK IN WEEK ENDED SATURDAY - EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.1 million short tons (mmst) of coal in ...
Friday, 24 January 14
DRY BULK MARKET STRUGGLING TO FIND FIRM FOOTING IN START OF 2014 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been faltering since the start of 2014, struggling to hold its ground as low seasonal demand has hindered further growth in ...
Thursday, 23 January 14
PANAMAX : THIS WEEK THE ACTIVITY CAME DOWN DRAMATICALLY - FEARNRESEARCH
Handy
With the Chinese New Year approaching the activity and rate levels are sliding in both hemispheres. Rates in the Atlantic have knocked off so ...
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- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
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