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