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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 April 13
SUB - BIT INDONESIA COAL SWAP SHOWS POSITIVE TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 2.70 percent and CFR South China coal shipment&nbs ...
Saturday, 13 April 13
THE FREIGHT MARKETS EXPECTED TO HOLD FIRM NEXT WEEK - CAPT. REDDY
COALspot.com - This freight market firmed up this week and all sectors were up except for Supramax index.
The BDI was up by 1.62 pct closing at 8 ...
Friday, 12 April 13
DRY BULK SHIP OWNERS DEVELOPED NEWFOUND APPETITE FOR BULKERS DURING FIRST QUARTER OF 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's official; more and more ship owners operating in the dry bulk market appear to have developed a newfound optimism in the market's prospects. ...
Thursday, 11 April 13
HANDY: INDO - INDIA NOW BEEN REPORTED AT APS BASIS AT USD 10K+BB 85K - FEARNLEYS
Handy
The Atlantic markets remain with not many cargoes seen this week. The USG-Feast was at USD 18k and Black Sea-Feast was at USD 12k. The Pacifi ...
Thursday, 11 April 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 15.96 PERCENT LESS COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 2,545,914 tons of thermal and coking coal for week ended 0700 hours 8 April 2013, Newcas ...
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- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Indika Energy - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
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