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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, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
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- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Dalmia Cement Bharat India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Australian Coal Association
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
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