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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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Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
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- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
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