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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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Friday, 07 October 16
INDONESIA'S DEMAND FOR COAL REMAINS STRONG: BP
Indonesia's domestic demand for coal shows no sign of slowing down as the country is banking on its coal abundance to meet the country' ...
Friday, 07 October 16
CEYLON SHIPPING CORPORATION HAS TAKEN DELIVERY OF COAL CARRIER MV.CEYLON PRINCESS
Sri Lanka’s Ceylon Shipping Corporation (CSC) has taken delivery of its second newly built bulk carrier for the transportation of coal to pow ...
Friday, 07 October 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 540.5 MMST; DOWN 21.9% Y-O-Y, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.7 million short ton ...
Thursday, 06 October 16
SHIPS IN PACIFIC ACHIEVE JUST ABOVE $10K DAILY FOR A BRAZIL ROUND VOYAGE - FEARNLEYS
Supramax
Slower week with limited activity due to holidays in the East. Mixed feelings within different markets, with slight downturn in Pacific ...
Wednesday, 05 October 16
OPEC TO SHUT OFF MORE THAN 6 PERCENT OF ITS PRODUCTION; MIXED FEELING AMONGST TRADERS - ALLIED
OPEC recent accord to shut off more than 6 percent of its production this past week has been met with mixed feeling amongst traders. As we mo ...
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- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
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- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
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- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
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- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- The University of Queensland
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- White Energy Company Limited
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
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