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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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Sunday, 29 September 13
SUB-BIT INDONESIA COAL SWAP FELL ON MONTH AND WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 3.93 percept month on month on Friday 27 September 2 ...
Friday, 27 September 13
TAIWAN'S FORMOSA TO IMPORT 140K MT OF BITUMINOUS COAL FOR Q4
COALspot.com : Taiwan's Formosa Plastics Group is inviting bids for 140,000 mt of bituminous coal for delivery in the Q4 for its China plant.
Ac ...
Friday, 27 September 13
CAPESIZES REGAINING PART OF THEIR FORMER GLORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The latest dry bulk market rally has been nothing short of spectacular, with freight rates more than doubling over the past few weeks. This growth h ...
Friday, 27 September 13
US PRODUCED 19.30 MMST OF COAL IN SEVEN DAYS
COALspot.com – United States the world’s second largest coal producer produced approximately 19.30 million short tons (mmst) of coal in ...
Thursday, 26 September 13
PANAMAX MARKET CONTINUE WITH STRONG RATES IN BOTH BASINS - FEARNRESEARCH
Handy
Feast rates are still firm, some fresh stems entered the market. Vessels trading around $15k passing Singapore for coal to India, and a bit l ...
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- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
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