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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, 30 May 13
HANDY: RBCT ROUND WAS AROUND USD 9K + 300 BB - FEARNRESEARCH
Handy
THE Atlantic market remained flat. The USG-Feast was at USD 19k and Black Sea-Feast was at USD 12k. The Pacific market remained quiet with no ...
Wednesday, 29 May 13
SHIP OWNERS KEEP ON SPENDING ON NEWBUILDINGS AS PRICES ARE DEEMED TOO LOW TO RESIST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It's been yet another week on increased newbuilding ordering activity with Hellenic ship owners appearing rathe active, on the back of attractive f ...
Tuesday, 28 May 13
NEWCASTLE PORT SHIPPED 9.76 PERCENT MORE COAL W/E 27 MAY 2013
COALspot.com - Newcastle port in Australia has loaded 2,420,366 tons of coal for week ended 0700 hours 27 May 2013, Newcastle Port Corp. said ...
Sunday, 26 May 13
AMPLE SUPPLY, LOW DEMAND KEEP COAL PRICES UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.07 percent and API 8 CFR South China Coal shipment los ...
Friday, 24 May 13
ENGAGEMENT WITH POTENTIAL STRATEGIC AND OFF TAKE PARTNERS ACCELERATING - REALM RESOURCES
COALspot.com - Following the recent completion of the Feasibility Study, the Realm Resources Ltd. (ASX: RRP) has focused on securing strategic ...
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- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Australian Coal Association
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