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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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- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- White Energy Company Limited
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
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