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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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Monday, 04 July 16
BDI ROSE ON STRONGER DEMAND ACROSS ALL VESSEL SEGMENTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 11.16 percent from la ...
Friday, 01 July 16
BREXIT SET TO HURT SHIPPING IN THE LONG-TERM AS IT WILL TAKE ITS TOLL IN THE GLOBAL ECONOMY'S GROWTH - HELLENIC SHIPPING
Setting aside the short-term negative impact of the Brexit, in terms of stock market and currency volatility, it’s more than evident that the ...
Friday, 01 July 16
U.S'S COAL EXPORTS HAVE DECLINED FOR TWELVE QUARTERS IN A ROW - EIA
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.7 million short t ...
Thursday, 30 June 16
CAPE - THIS WEEK'S FREIGHT AND ACTIVITY LEVEL HAVE KEPT STABLE - FEARNLEYS
Cape
This week’s freight and activity level have kept stable. It is support at the present levels and despite a volatile market the freight ...
Thursday, 30 June 16
OIL PRODUCT TANKERS EARNINGS DECLINE AS STOCKBUILDING SLOWS DOWN - BIMCO
BIMCO’s expectations remain as the oil product tanker fleet continues to grow with earnings at the lowest since Q3 in 2014. But there is stil ...
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- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
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