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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, 20 March 18
SHIPPING MARKET ANALYSIS - GEORGE LAZARIDIS
It has been a chilling start to the week for the global economy, with the vast majority of stock exchanges noting a fair drop, after a series of se ...
Tuesday, 20 March 18
TRAFIGURA GROUP PTE LTD SIGNS RECORD US$5.725 BILLION EUROPEAN MULTICURRENCY SYNDICATED REVOLVING CREDIT FACILITIES AND JPY72.64 BILLION DENOMINATED THREE YEAR TERM LOAN
Press Release: Trafigura Group Pte Ltd. (“Trafigura” or the “Company”), a market leader in the global commodities industry, ...
Monday, 19 March 18
PANAMAX: DESPITE FEWER REPORTED PERIOD TRADES THIS WEEK, RATE LEVELS HAVE REMAINED SOLID - BALTIC BRIEFING
Capesize
There were finally reports of increased Brazil activity, but still largely unconfirmed. Vale reportedly took six ships Thursday for 5 Ap ...
Friday, 16 March 18
WEEKLY US COAL PRODUCTION DROPS 1.9 PER CENT WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 14.8 million short tons ...
Friday, 16 March 18
INDONESIA COAL PRICE CAP POSES LIMITED RISKS TO PRODUCERS : FITCH
Indonesia’s cap on the benchmark price of coal sold to the domestic electricity sector is unlikely to have a significant impact on the credit ...
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- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Parliament of New Zealand
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
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