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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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Monday, 23 January 17
THE FREIGHT MARKET DID NOT CHANGE MUCH AND WAS ALMOST AT SAME LEVELS AS LAST WEEK
COALspot.com: The Freight market did not change much and was almost at same levels as last week.
The Baltic Exchange, tracking rates for ships ...
Friday, 20 January 17
U.S. WEEKLY COAL OUTPUT ESTIMATED 15.7 MMST; UP 14.1% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Thursday, 19 January 17
KOREAN POWER UTILITY BORYEONG POWER TO IMPORT 660K TONS OF BITUMINOUS COAL FOR MARCH 2017
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 590,000 Metric Tons of Bituminous coal and 7000 ...
Thursday, 19 January 17
PANAMAX RATES ARE UNDER PRESSURE IN BOTH HEMISPHERES - FEARNLEYS
Supramax
The market remained flat and the week continued at the same pace as last.
According to Fearnleys weekly dry bulk report, still more ...
Wednesday, 18 January 17
TANKER: THE CLEAN PRODUCT MARKET IS STILL NOT GIVING US ANY CLEAR SIGNS OF RECOVERY - GEORGE VASTARDIS
While we are approaching the Chinese New Year, the Clean Product market is still not giving us any clear signs of recovery, especially on The East ...
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- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- White Energy Company Limited
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- GMR Energy Limited - India
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
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