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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, 11 May 16
MARKET INSIGHT - KATERINA RESTIS
On Saturday 7th May, Riyadh replaced the long-serving oil minister of more than two decades, Ali-Al-Naimi, as part of a major government overhaul, ...
Tuesday, 10 May 16
VOLATILITY? VARIATION NO ENIGMA TO SHIPPING..... - CLARKSONS
Along with cyclicality, the other characteristic of the shipping markets which receives frequent mention is volatility. This is so evident that the ...
Monday, 09 May 16
INDONESIAN CS COAL INDICES UP CONTINUES; POSITIVE DIRECTION
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.10 percent week over week to averaging $38.82 per ton on this past Wednesday, a ...
Monday, 09 May 16
DRY BULK SHIPPING TO WITNESS STEADY PROGRESS MOVING FORWARD ON THE BACK OF GROWING TRADE VOLUMES - BIMCO
In its latest short-term analysis of the shipping markets, BIMCO reiterated its optimism on the prospects of the dry bulk market moving forward. Ac ...
Monday, 09 May 16
BALTIC DRY INDEX ENDS WEEK ON A NEGATIVE NOTE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
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- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
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