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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, 29 June 16
THE DRY BULK INDICES, OPPOSITE TO MOST GLOBAL MARKET INDICES, ROSE END OF LAST WEEK
Last week closed off with a massive shockwave for markets across the world following the British referendum, the result of which will mark the begi ...
Tuesday, 28 June 16
WEEKLY CS COAL INDICES ROSE ON RENEWED DEMAND FROM CHINA
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up by 0.66 percent week over week to averaging $39.65 per ton this past week, sh ...
Tuesday, 28 June 16
CHINA'S IRON ORE IMPORTS: HOW MUCH MORE WORK FOR CAPES? - CLARKSONS
Chinese iron ore imports account for around two thirds of global seaborne iron ore shipments, making it the key driver of Capesize employment. Whil ...
Monday, 27 June 16
LATEST NEWS ON BIMCO'S CONTRACTS AND CLAUSES
BIMCO is currently updating several of its most widely used charter parties including SUPPLYTIME and BARECON. New developments include the Standard ...
Monday, 27 June 16
BREXIT RESULT COULD SEE UK FACING AN EXODUS OF MARITIME TALENT - FASTSTREAM
The UK’s decision to leave the EU has the potential to drive many of its maritime employees away, according to the results of a survey issued ...
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- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Australian Coal Association
- White Energy Company Limited
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
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- TNB Fuel Sdn Bhd - Malaysia
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- Banpu Public Company Limited - Thailand
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- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Edison Trading Spa - Italy
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- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
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- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
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- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
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- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
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