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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, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of global ...
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculati ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
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- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Planning Commission, India
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
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