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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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Monday, 28 March 16
THE SUPRAMAX INDEX WAS UP TWENTY-FOUR POINTS TO 473 POINTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 25 March 16
DRY BULK SHIPPING FLEET WILL GROW BY 1.3% DURING 2016 - BIMCO | HELLENIC SHIPPING NEWS
The dry bulk market will keep on suffering, at least until the start of 2017 and possibly well after that, should the current balance of supply and ...
Friday, 25 March 16
U.S COAL PRODUCTION DECLINED 9.1% W/W - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million shor ...
Thursday, 24 March 16
PERSISTENT OVERCAPACITY TO PROLONG CHINA'S COAL SECTOR DOWNTURN - FITCH
China's coal sector is likely to remain under pressure in the short to medium term as structural weaknesses in demand and overcapacity persist, ...
Thursday, 24 March 16
SEABORNE TRADE: CHECKING UP ON THE TRENDS - CLARKSON RESEARCH
Following a decline in 2009, seaborne trade grew on average by 4.9% p.a. in 2010-13, reflecting booming import demand in a number of key importing ...
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- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
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