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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, 13 November 14
MODERN DRY BULK SHIPS' PRICES START FIRMING UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While the main story of the past few weeks has been the rebound of the dry bulk market, which has been a result of increased Chinese iron ore impor ...
Wednesday, 12 November 14
PANAMAX: WITNESSED A FAIRLY STABLE MARKET IN THE ATLANTIC
COALspot.com: Despite the fact that the Dry Bulk market noted another weekly increase, clouds of uncertainty returned mid-week onwards, as the mini ...
Wednesday, 12 November 14
SHIPPING MARKET INSIGHT - CHRISTOPHER T. WHITTY
COALspot.com: The fight continues between the low-cost iron ore producers and the big three: Vale, Rio Tinto and BHP Billiton. We are moving into a ...
Tuesday, 11 November 14
FACING CHALLENGES AND MEETING OPPORTUNITIES - INTERNATIONAL EPC CONFERENCE & EXHIBITION
Press Release: SKYCONNECTION and TRANSEVENT, which is fully supported by the Institution of Engineers Indonesia and Ministry of Industry of the Rep ...
Tuesday, 11 November 14
NEWCASTLE COAL SWAP CLOSED AT $ 52.65 FOR Q1' 15 DELIVERY
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery decreased US$ 2.83 (-5.10%) month over month and US$ 1.35 (-2.50%) week ove ...
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- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Attock Cement Pakistan Limited
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
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