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