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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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Wednesday, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
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- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- The University of Queensland
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
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