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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, 23 September 16
"COLLATERAL LIES" DO NOT NECESSARILY UNDERMINE AN INSURANCE CLAIM
KNOWLEDGE TO ELEVATE
An insured was not precluded from recovering under an insurance policy even though it had made a false statement during t ...
Friday, 23 September 16
EIA SEES U.S. COAL WEEKLY OUTPUT INCREASE
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Thursday, 22 September 16
CHINA IS THE PRICE-SETTING COUNTRY FOR GLOBAL THERMAL COAL
COALspot.com: China has been the driver of global coal growth since 2009. When China became the largest coal importer in 2011, the country also has ...
Thursday, 22 September 16
SUPRAMAXES ARE ACHIEVING AROUND $7000 FOR A TRIP WITH SINGAPORE DELIVERY VIA INDONESIA TO CHINA
Supramax
A slow start to the week in the Supramax segment in the Atlantic with not much being reported.
In the Blacksea Supramaxes are getti ...
Wednesday, 21 September 16
THE CAPESIZE MARKET HAS BEEN ON A RALLYING TREND SINCE THE END OF AUGUST - GEORGE LAZARIDIS
The Capesize market has been on a rallying trend since the end of August, fuelled mainly by the chase by traders to pre-stock before the typical pi ...
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- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Uttam Galva Steels Limited - India
- The University of Queensland
- Central Java Power - Indonesia
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
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