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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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Sunday, 20 January 13
Q1 & Q4 SUB-BIT FOB INDONESIA COAL SWAPS: FIRM
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) and CFR South China coal shipment for average Q1’ 2013 delivery have gained 0.81percent and ...
Sunday, 20 January 13
S7 & S8 ROUTE FREIGHT TREND IS EXPECTED TO BE FLAT TO SOFT THIS WEEK - VISTAAR
COALspot.com - The freight market was fairly steady with all the indices BDI up by 9.21 pct closing at 837 points. The Cape index was also sharply u ...
Friday, 18 January 13
NEWLEAD HOLDINGS LTD. TO ACQUIRE TWO COAL PROPERTIES WITH ESTIMATED COAL RESERVES OF 18.6 MMT & 143.1 MMT
NewLead Holdings Ltd. Announces Signing Agreement to Acquire Properties with Estimated Coal Reserves of 18.6 Million Tons; Signing Agreement to Acqu ...
Friday, 18 January 13
DRY BULK MARKET ON THE RISE, ON STRONG DEMAND FOR CAPESIZE VESSELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has continued its climbing trend yesterday, as the industry's benchmark, the Baltic Dry Index (BDI) was up by 39 points to 820. ...
Friday, 18 January 13
CAPESIZE : SIGNALS ARE MIXED BUT THE OVERALL TENDENCY IS POSITIVE - FEARNLEYS
Handy
The Atlantic market remained stable with USG-Feast fixed around USD 17k, according to fearnleys’s weekly report.
Continent / Medite ...
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- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- White Energy Company Limited
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
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