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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Central Electricity Authority - India
- White Energy Company Limited
- London Commodity Brokers - England
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- The University of Queensland
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
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