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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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Tuesday, 03 May 16
HOW TO AVOID THE LATEST CARGO FRAUDS - BIMCO
BIMCO receives regular reports from members around the world about cargo fraud. This week alone we have had two reports of cargoes being fixed (or ...
Monday, 02 May 16
INDIA'S GANGAVARAM PORT SETS ALL INDIA RECORD FOR NON-COKING COAL DISCHARGE
COALspot.com: Gangavaram Port, the deepest and the most modern port in India, has created yet another historical milestone record by discharging 15 ...
Monday, 02 May 16
CS (I) 5000 GAR COAL INDEX CLOSES 0.11% HIGHER, 5700 GAR COAL RISES 0.07% W/W
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.28 percent week over week to averaging $38.78 per ton on this past Friday, acco ...
Monday, 02 May 16
FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Saturday, 30 April 16
40 YEARS OF HANDLING COAL AT THE BTW IN WILHELMSHAVEN UNDER THE RHENUS FLAG
Press Release: The first bulk carrier with coal on board docked at the Bulk Terminal Wilhelmshaven (BTW), which is operated by Rhenus Midgar ...
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- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- PTC India Limited - India
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- White Energy Company Limited
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Marubeni Corporation - India
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
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