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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, 30 November 14
SUPRAMAX COAL FREIGHT RATES FROM INDONESIA TO INDIA : FIRM
COALspot.com: The BDI fell 171 points and closed at 1153 points on Friday 28 November 2014. The Cape index also lost 887 points and closed at 2151 ...
Friday, 28 November 14
NEW BIMCO CLAUSE AIMS TO REDUCE SUPPLIERS' RELIANCE ON SHIP ARREST FOR CHARTERERS' UNPAID BUNKERS
KNOWLEDGE TO ELEVATE
Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a tim ...
Friday, 28 November 14
JSW ENERGY AND GRM RESOURCES JOIN GLOBALCOAL
COALspot.com: globalCOAL® announced yesterday that two new Market Members have joined its online coal trading platform. According globaCOAL&rsq ...
Thursday, 27 November 14
MINING SERVICES TAX SPIKED BY 233% - BISNIS INDONESIA
COALspot.com: The Energy and Mineral Resources Department of Indonesia said the tax contribution from mining services sector in the 3rd Q 2014 ...
Thursday, 27 November 14
PANAMAX : EXPECTATION'S FOR A STRONG END OF YEAR RUSH, DISAPPEAR DAY BY DAY - FEARNLEYS
Handy
“We have experienced a firming market the last couple of weeks. More activity from cargo owners in the Atlantic and less available to ...
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- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- PTC India Limited - India
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Australian Coal Association
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Aditya Birla Group - India
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