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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, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
Friday, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
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- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- CNBM International Corporation - China
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Australian Coal Association
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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