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