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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
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The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
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Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Australian Coal Association
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- White Energy Company Limited
- Minerals Council of Australia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
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