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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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Thursday, 10 November 16
WILL TRUMP VICTORY PROVIDE A BOOST FOR HYDROCARBON & COAL INDUSTRIES? - DOUGLAS-WESTWOOD
Donald Trump’s surprise victory ends months of an adversarial presidential campaign with bitter disagreements between the two major candidate ...
Thursday, 10 November 16
PANAMAX: NO TRUMP INFLUENCE YET, AND THE MARKET IS HEADING NORTH - FEARNLEYS
Supramax
Pacific Supra market still soft and falling this week, although seems to be in a somewhat slower pace compared to last week. According t ...
Wednesday, 09 November 16
SINGAPORE'S SGX COMPLETES ACQUISITION OF LONDON'S BALTIC EXCHANGE
COALspot.com: Singapore Exchange Limited and The Baltic Exchange Limited together announced that the acquisition of the Baltic Exchange by SGX has ...
Wednesday, 09 November 16
SUPRAMAX: 50% INCREASE ON AVERAGE SINCE THE FIRST QUARTER OF THE YEAR - GIANNIS ANDRITSOPOULOS
Last week was an interesting one for the tanker market, which following the explosion of the gas pipeline in Alabama witnessed a spike in Atlantic ...
Tuesday, 08 November 16
S.KOREA'S KOMIPO ISSUES TENDER TO BUY 390K TONS OF BITUMINOUS COAL FOR JAN-FEB 2017
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 390,000 Metric Tons of Bituminous Coal for its B ...
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- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
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