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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, 17 June 12
S7 & S8 ROUTES ARE LIKELY TO BE SOFT NEXT WEEK - VISTAAR
COALspot.com - The BDI gained some increase after continues fall for several weeks.
The BDI increased by 47 points (up by 5.36 pct) closing at 92 ...
Saturday, 16 June 12
INDONESIAN SUB-BITUMINOUS COAL & CFR SOUTH CHINA COAL CONTRACT SWAPS ARE UNDER PRESSURE
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for July deliveries seems to be under pressure this week.&nbs ...
Friday, 15 June 12
CAPESIZE - THE LEVELS THAT DID FIX ARE DOWN W-O-W LEVELS - FEARNLEYS
Handy
Another slow-moving market with rates hovering at same level as last week. US Gulf positions fixed USD 25,000 for trips to Cont/Passero and S ...
Thursday, 14 June 12
SMALLER DRY BULK CARRIERS LIKELY TO FACE MORE CHALLENGES; DEMOLITION ACTIVITY SET FOR RECORD YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest update on the dry bulk markets, BIMCO said that China is partly “failing to deliver” on raw material imports that can affe ...
Wednesday, 13 June 12
LOW COAL PRICES COULD CHANGE SUPPLY SIDE DYNAMICS - FITCH RATINGS
Fitch Ratings believes that the weakness seen in thermal coal prices in recent months should reverse once demand from major importers recovers, alth ...
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- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- White Energy Company Limited
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Planning Commission, India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
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