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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, 15 July 13
INDO COAL SWAPS ARE STRUGGLING FOR RIGHT DIRECTION
COALspot.com – Indo coal swaps are struggling to find the right direction. Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 d ...
Friday, 12 July 13
U.S. PRODUCED 18.40 MMST COAL WEEK ENDED 6 JULY 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.40 million short tons (mmst) of ...
Thursday, 11 July 13
PANAMAX: PACIFIC ROUND PAY AROUND $6,500/D; ATLANTIC ROUND VOYAGE PAY AROUND US$ 10,000/D - FEARNLEYS AS
Handy
The Feast market is quiet, July date cargoes remain unfixed as there is a gap between what owners aiming and charterers willing to pay. There ...
Wednesday, 10 July 13
DRY BULK MARKET IS STILL STRUGGLING TO SURVIVE - INTERMODAL
COALspot.com : With the first half of the year now behind us and, as expected, most shipping segments in the dry bulk market are struggling to survi ...
Tuesday, 09 July 13
COAL PRICE REMAINS SLUGGISH - TRIMEGAH
COALspot.com - Newcastle coal price has reached US$ 76.30/ton (-15.9% YTD), bringing YTD’13 average to stand at US$ 87.90/ton, 6.80% lower tha ...
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- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
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