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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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Wednesday, 25 December 13
SHIPPING : AS FAR AS THIS CYCLE IS CONCERNED, 'WE HAVE SEEN THE WORST....!' - JOHN N. COTZIAS
In a week’s time the year comes to an end. Having been a speaker in two seminars over the past 5 days I was able to see the year ending trends ...
Tuesday, 24 December 13
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS UP 11.46% W-W
COALspot.com: In the week ended December 23, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.84 ...
Tuesday, 24 December 13
SGX HAS LAUNCHED FREIGHT FUTURES
COALspot.com: Singapore Exchange (SGX) has announced the launch of freight future yesterday.
According to SGX’s press release, SGX has laun ...
Monday, 23 December 13
API 8 CFR SOUTH CHINA COAL SWAP FOR AVERAGE Q1' 14 CLOSED AT $ 82.80
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 2.97 percept month on month as on Friday 20 December 2013. ...
Sunday, 22 December 13
Q1' 14 DELIVERY COAL SWAPS CLOSING HIGH COMPARED TO Q4' 14 DELIVERY CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery gained $ 1.31 pmt month on month on Friday 20 December 2013 ...
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- MS Steel International - UAE
- Minerals Council of Australia
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- The University of Queensland
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
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