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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 December 16
TRADE HAS FELT ITS BUMPS AND SHAKES THIS YEAR - GEORGE LAZARIDIS
Trade has felt its bumps and shakes this year, as growing populist protectionist and nationalist movements in the Western world start to take hold. ...
Tuesday, 20 December 16
TURNAROUND IN CHINESE ECONOMY HAS INTENSIFIED RECENTLY, SAYS COMMODORE RESEARCH
According to the most recent Weekly China Report published by Commodore Research, it has remained encouraging that the turnaround in China’s ...
Monday, 19 December 16
U.S. WEEKLY COAL PRODUCTION DOWN 3.1% PERCENT WEEK ON WEEK
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
Monday, 19 December 16
THE FREIGHT MARKET WAS CONTINUING TO SOFTEN
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continually decline this past week and ending on a negati ...
Thursday, 15 December 16
SUPRAMAXES ARE ACHIEVING AROUND HIGH USD 7K FOR INDO/CHINA COAL ROUNDS - FEARNLEY
Supramax
Pacific has been relatively quiet this week, with some softening signs.
Supramaxes are achieving around high USD 7k for Indo/China ...
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- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- PTC India Limited - India
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
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