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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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Tuesday, 26 March 13
NEWCASTLE PORT SHIPPED 2.39 MMT OF COAL W/E 25 MARCH 2013
COALspot.com - Newcastle port in Australia has loaded 2.396 million tons of thermal and coking coal for week ended 0700 hours 25 March 2013, N ...
Monday, 25 March 13
BUNKER FUELS ARE ABOUT TO GET CLEANER, BUT AT WHAT COST? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The cost of bunkers is nowadays the driving force behind most ship owners' major decisions, with regulations bound to change in many parts of the w ...
Sunday, 24 March 13
THE SUB-BIT INDONESIA'S COAL SWAPS FOR Q2 DELIVERY PRICE LOST 7.47 PERCENT PMT M-O-M
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has lost 3.39 percent and CFR South China coal shipment 2.65 ...
Sunday, 24 March 13
FREIGHT MARKETS CONTINUED TO FIRM - VISTAAR
COALspot.com - This freight market continued to remain firm in all segments except for cape index which softened slightly.
The BDI was up by 4.60 ...
Sunday, 24 March 13
DRY BULK MARKET PROSPECTS OFFER ROOM FOR RESTRAINED OPTIMISM SAYS SHIP OWNER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its announcement regarding its annual performance, ship owner Frontline offered some useful insight on the future prospects of both the dry bulk ...
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- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- VISA Power Limited - India
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- White Energy Company Limited
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
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