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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, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- PTC India Limited - India
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- The University of Queensland
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Australian Coal Association
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
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