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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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- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Planning Commission, India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
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