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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, 27 June 16
THE BDI UP 3.75 PERCENT ; BCI FELL 1.51% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.75 percent from las ...
Monday, 27 June 16
INDONESIA BANS (AGAIN) SHIPS SAILING TO THE PHILIPPINES FROM INDONESIA
COALspot.com: The Indonesian Transport Ministry strictly prohibited harbour masters issuing permits to all Indonesian-flagged vessels bound for the ...
Friday, 24 June 16
U.S WEEKLY COAL PRODUCTION UP MARGINALLY
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.4 million short tons ...
Wednesday, 22 June 16
SMALL RISE IN SHIPPING CONFIDENCE - MOORE STEPHENS
In May 2016, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). ...
Wednesday, 22 June 16
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Stagnation- With the BDI stuck in the low 600 points for almost a month now, if we had to choose a word to describe the state of the Dry Bulk freig ...
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- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- The University of Queensland
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Australian Coal Association
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
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