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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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- The University of Queensland
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- GMR Energy Limited - India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
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