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