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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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Thursday, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
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According to Fearnleys, ...
Wednesday, 03 February 16
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Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Australian Coal Association
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
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