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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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Thursday, 18 July 13
DRY BULK MARKETS RETAINS RECENT GAINS, MOVES SIDEWAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on moving sideways this week, as evidenced by the latest trends of the industry's benchmark, the Baltic Dry Index (BDI ...
Wednesday, 17 July 13
NEWCASTLE COAL EXPORTS FELL 3.85% ON WEEK
COALspot.com: Newcastle port in Australia has loaded 2,860,149 tons of coal for the week ended 0700 hours 15 July 2013, Newcastle Port Corp. s ...
Wednesday, 17 July 13
TORN BETWEEN A CREDIT CRUNCH AND SUSTAINABLE GROWTH - GEORGE DERMATIS
COALspot.com: In 2012 China expanded at a rate of 7.8%, its worst annual performance in 13 years, raising criticism over the newly appointed governm ...
Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whet ...
Monday, 15 July 13
INDONESIAN GOVERNMENT HAS REVISED DOWN ITS JULY BENCH-MARK COAL PRICE TO US$ 81.69 PER MT
COALspot. com - Indonesian Coal Price Reference dropped 3.75 % and hitting a 2013 low. The Indonesian government has revised down its owned coal ben ...
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- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
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