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