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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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Sunday, 21 June 15
SPOT RATE AVERAGES FOR FREIGHT FROM INDONESIA TO INDIA REMAIN STRONG THIS WEEK
COALspot.com: The freight market was quite firm this week compared to last week. The BDI was up 21% week on week and closed at 779 points. The cape ...
Friday, 19 June 15
U.S. WEEKLY COAL PRODUCTION UP SLIGHTLY COMPARED TO LAST WEEK; CONTINUES TO BE DOWN FROM LAST YEAR
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 15.4 million short ...
Friday, 19 June 15
INDONESIA'S COAL-TRAFFICKING PROBLEM REQUIRES IMPARTIAL INQUIRY - JAKARTA GLOBE
Indonesia, the leading supplier to the seaborne thermal coal market, produces 420 million tons of coal per year, according to its official tally.
...
Thursday, 18 June 15
DRY BULK SHIPPING: LOWEST FLEET GROWTH IN 10 YEARS MAY NOT PROVE ENOUGH AS DEMAND IS NOT KEEPING PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The demand side of things in the dry bulk market seems unable to keep pace with even the slightest fleet growth, a sign of the demise that the indu ...
Thursday, 18 June 15
THE FAR EAST HANDYSIZE, HANDYMAX, SUPRAMAX MARKET REMAINED STEADY LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market closed off on Friday (last week) noting small gains on the back of stronger performance in the Panamax segment, w ...
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- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
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