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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, 04 February 20
CAPE: THE AVERAGE EARNINGS PER DAY FELL BENEATH THE USD 4,000, A LEVEL CONSIDERABLY BELOW EVEN THE MOST CONSERVATIVE OPEX LEVELS - ALLIED
The recent slump in the dry bulk freight market may well have been expected to some degree, but despite this the shock was still overwhelming when ...
Monday, 03 February 20
KOWEPO INVITING BIDS FOR 2.46 MILLION TONS OF MIN.5700 AND MIN.5600 NCV COAL
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for total 2,460,000 tons of (Sub) Bitum ...
Sunday, 02 February 20
NOVEL CORONAVIRUS OUTBREAK IN CHINA - STANDARD CLUB
Members will be aware of the recent novel coronavirus outbreak in China, which has now been declared a global emergency by the World Health Organis ...
Sunday, 02 February 20
SUPRAMAX: A 52,000DWT SHIP WAS FIXED BASIS DELIVERY SOUTH KALIMANTAN TRIP TO INDIA, AT $6,000 - BALTIC BRIEFING
Capesize
The week proved conspicuous for all the wrong reasons. This was the week when the Baltic Capesize Index (BCI) turned negative, closing ...
Saturday, 01 February 20
50 MILLION PEOPLE QUARANTINED IN CHINA TO CONTAIN SPREAD OF CORONAVIRUS - HOW DOES IT AFFECT SHIPPING? - BIMCO
The outbreak of the novel coronavirus, declared a global health emergency by the WHO, has caused massive uncertainty across the global markets with ...
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- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Sical Logistics Limited - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
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- Minerals Council of Australia
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- Coal and Oil Company - UAE
- Anglo American - United Kingdom
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- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- White Energy Company Limited
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- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
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- Bulk Trading Sa - Switzerland
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- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Planning Commission, India
- Banpu Public Company Limited - Thailand
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- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
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- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
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- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
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- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
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- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
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- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
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- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- The University of Queensland
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
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- Thiess Contractors Indonesia
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- Siam City Cement PLC, Thailand
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- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
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