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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, 13 July 15
THE DRY BULK MARKET CLOSED ON A POSITIVE TONE THIS PAST WEEK
COALspot.com: Despite Greece crisis and turmoil in the stock market across the world , the freight market overall was firm and up in all segments t ...
Sunday, 12 July 15
SHIPYARD NOT LIABLE FOR ENGINE ROOM FIRE CAUSED BY OIL LEAKAGE - BIRCH WINDAHL
KNOWLEDGE TO ELEVATE
A Danish vessel owner requested a Danish shipyard to undertake repairs and maintenance works on its vessel. An agreement ...
Saturday, 11 July 15
MAJOR IRANIAN GAS EXPORTS WILL TAKE AT LEAST FIVE YEARS - FITCH
Iran has the long-term potential to become one of the world's top gas producers, thanks to its 34 trillion cubic meters (tcm) of natural gas re ...
Friday, 10 July 15
DRY BULK MARKET KEEPS POSITIVE MOMENTUM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its positive momentum over the course of the past few days, thanks to Panamax gains. During yesterday’s session ...
Friday, 10 July 15
U.S PRODUCED APPROXIMATELY TOTALED AN ESTIMATED 14.1 MMST WEEK OVER WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 14.1 million short ...
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- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Australian Coal Association
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
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