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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, 15 June 16
THE DRY BULK PRICES CORRECTED UPWARDS ROUGHLY 15% - KONSTANTINOS KONTOMICHIS
Once more, the international shipping community turned its attention to Greece and more specifically to Attica that hosted Posidonia, the biggest m ...
Tuesday, 14 June 16
CS COAL INDICES ROSE UP FOR A THIRD STRAIGHT WEEK; 4200 GAR COAL UP 0.73%
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up 0.54 percent week over week to averaging $39.37 per ton this past week, shows ...
Monday, 13 June 16
DEMAND FOR DRY BULK COMMODITIES COULD PROVIDE FUTURE BOOST FOR SHIP OWNERS - HELLENIC SHIPPING NEWS
When it comes to the dry bulk market, shipowners these days are looking for news in any shape or form they can find them. However, as the discussio ...
Monday, 13 June 16
ONSHORE SHALE: WORTH KEEPING IN THE SHIPPING SPOTLIGHT CLARKSONS
Generally, shipping industry watchers spend much of their time monitoring events out to sea: how fleets are evolving, trade volumes growing and fre ...
Monday, 13 June 16
PORT OF NEWCASTLE SHIPPED 5.03% MORE COAL IN MAY; AVERAGE SELLING PRICE DECLINED 2.08% FROM APRIL
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU 1.162bill ...
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- The State Trading Corporation of India Ltd
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- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
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- Minerals Council of Australia
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- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
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- Global Coal Blending Company Limited - Australia
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- Bhoruka Overseas - Indonesia
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- Ministry of Finance - Indonesia
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- Wood Mackenzie - Singapore
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- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- White Energy Company Limited
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- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
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- The University of Queensland
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- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
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- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
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- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
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- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
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- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
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- Toyota Tsusho Corporation, Japan
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- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
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- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
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- IEA Clean Coal Centre - UK
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- Binh Thuan Hamico - Vietnam
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- Power Finance Corporation Ltd., India
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