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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, 29 January 19
HARD COAL BEARS THE BRUNT OF THE RECOMMENDATIONS OF THE COMMISSION GROWTH STRUCTURAL CHANGE AND EMPLOYMENT - VDKI
Press Release: Hard coal bears the brunt of the recommendations of the Commission Growth Structural change and employment.
In its fi ...
Tuesday, 29 January 19
CHINA HAS BEEN THE TOP DRIVER OF GLOBAL GROWTH FOR NEARLY TWO DECADES - ALLIED
China has been the top driver of global growth for nearly two decades now, pushing demand for seaborne trade and being the key influencer for deman ...
Saturday, 26 January 19
SUPRAMAX: NICKEL ORE RUNS SAW A 56K DWT VESSEL, DELIVERY PHILIPPINES, FIXED FOR A TRIP TO CHINA AT $6K - BALTIC BRIEFING
Capesize
A week of dashed hopes for owners as the optimism evident the previous week evaporated. Rates slipped on all routes and underlying thr ...
Thursday, 24 January 19
ANOTHER DISAPPOINTING WEEK FOR PANAMAX OWNERS; MARKET CONTINUES DOWN IN BOTH BASINS - FEARNLEYS
Capesize
The week has been marked by low activity and dropping rates in both basins. As usual, supply additions have increased at the beginning ...
Thursday, 24 January 19
KOREA SOUTHERN POWER INVITED BIDS FOR 960K MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
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- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Planning Commission, India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- PTC India Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Aditya Birla Group - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
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