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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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Friday, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
Friday, 16 September 22
DRY BULK MARKET: EU’S BAN ON RUSSIAN COAL LIFTS DEMAND DESPITE ECONOMIC HEADWINDS - BIMCO
Highlights
– The Baltic Exchange Dry Index (BDI) peaked in late May and has since fallen sharply as lower Chinese demand and adverse glob ...
Friday, 16 September 22
BIMCO EMBARKS ON NEW STANDARD FOR “QUIET ENJOYMENT”
KNOWLEDGE TO ELEVATE
A newly set-up BIMCO drafting team involving a cross-section of shipowners, charterers, financing and leasing i ...
Friday, 16 September 22
INDIAN COAL PRODUCTION TO RISE 150 PER CENT IN 10 YEARS: CENTRE - EXPRESS NEWS SERVICE
The Union Ministry of Mines is expecting 150 per cent growth in coal production 10 years down the line as a result of coal reforms that had been us ...
Thursday, 15 September 22
MARKET INSIGHT - INTERMODAL
While the Organization of Petroleum Exporting Countries and its allies agreed on a 100,000 b/d output cut last week, oil flows are in the spotlight ...
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- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Minerals Council of Australia
- McConnell Dowell - Australia
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
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