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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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Wednesday, 21 September 16
SHIPPING MARKET INSIGHT - PANOS MAKRINOS
Amidst a challenging dry bulk and tanker market, very little time has been spent on the offshore industry developments during the past couple of ye ...
Monday, 19 September 16
AFTER YEARS OF COMA, COAL BECOMES THE MOST ATTRACTIVE COMMODITY RIGHT NOW
COALspot.com: China boosted coal imports in recent months. The Chinese government’s drive to cut over capacity pushed up the demand for therm ...
Monday, 19 September 16
THE CAPE INDEX WAS UP 7.28% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined and ending in a slightly negative note this past ...
Friday, 16 September 16
GLOBAL SHIPBUILDING: THE CHALLENGE TO REMAIN 'ACTIVE' - CHRISTOPHER PEARCE, CLARKSONS
The number of ‘active’ shipyards globally has more than halved since the start of 2009, falling to around 400 shipyards at the start of ...
Friday, 16 September 16
U.S. WEEKLY COAL OUTPUT DECLINED 6.2% TO 15.1 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.1 million short ton ...
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- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
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