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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, 11 April 13
TNEB HAS OPENED 4.2 MILLION TONS IMPORTED COAL TENDER
COALspot.com - TANGEDCO, the state run utility TANGEDCO (formerly known as TNEB), Tamil Nadu state owned electricity company has opened bids to purc ...
Wednesday, 10 April 13
US COAL CONSUMPTION TO INCREASE FROM 889 MMST IN 2012 TO 948 MMST IN 2013 AND 957 MMST IN 2014 - EIA
Based on estimates for the first quarter of 2013, American coal production has continued to decline.
Total production is down 9.9 million short t ...
Wednesday, 10 April 13
DRY BULK FREIGHT RATES SEEN MOSTLY STABLE IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
In its latest report, BIMCO forecast that for the coming six weeks, Capesize time charter average rates will remain subdued around $4,500-8,500 per ...
Monday, 08 April 13
SUB-BIT INDONESIA COAL SWAPS: UPWARD TREND
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 2.71 percent and CFR South China coal shipment&nbs ...
Sunday, 07 April 13
CHARTER RATES ARE UNDER PRESSURE DUE TO DECLINING DEMAND - VISTAAR
COALspot.com - The freight market continued to fall further with all the indices down.
The BDI was down by 5.38 pct closing at 861 points and the ...
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- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- The University of Queensland
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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