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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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Friday, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
Friday, 28 August 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING AUGUST 22 ROSE FOR THE THIRD STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.5 million shor ...
Friday, 28 August 15
BANPU STRENGTHENS GROWTH PLAN
Coal Business: Asia-Pacific Synergies Increase Competitiveness for Premium Export Market.
Banpu Public Company Limited (BANPU) strengthens its ...
Thursday, 27 August 15
RATES FOR CAPES REMAINED ON A FREE FALL LAST WEEK - INTERMODAL
COALspot.com: Keeping everyone on their toes with the volatility seen in August, the Dry Bulk market undoubtedly remains a steady provider of chall ...
Wednesday, 26 August 15
MARKET INSIGHT - STRATOS TINIAKOS
It’s always interesting to comment on the market when big economies around the world are facing troubling times. Following the collapse of th ...
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- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- The University of Queensland
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Planning Commission, India
- London Commodity Brokers - England
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- Marubeni Corporation - India
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- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
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