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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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Friday, 22 August 14
U.S WEEKLY COAL PRODUCTION UP 2.4% WEEK OVER WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.60 million short tons (mmst) of coal in ...
Thursday, 21 August 14
PREDICTIONS FROM VARIOUS SHIPPERS AND MINING INDUSTRY FOR 2ND HALF YEAR AND ESPECIALLY Q4 IS POSITIVE
Handy
The activity has increased in both hemispheres this week and we see rates edging up on all trades. TA´s are now paying around 8k whic ...
Thursday, 21 August 14
SHIP OWNERS KEEP SHYING AWAY FOR NEW SHIP INVESTMENTS, OVERALL TREND IS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have remained in the sidelines of the Sale & Purchasing market for second hand vessels, during most of August, while they also slow ...
Wednesday, 20 August 14
DRY BULK MARKET TO REBOUND IN THE FOURTH QUARTER, OR NOT....- NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The projected rebound of the dry bulk market is still an elusive trend and shipbrokers and analysts are looking to identify the timing of the loomi ...
Monday, 18 August 14
CAPESIZE RATES TO RISE TO MUCH HIGHER LEVELS THIS YEAR - JEFFREY LANDSBERG
COALspot.com: Capesize rates ended last week at $15,561/day, which marked a week-on-week increase of $6,167 (66%). Capesize rates have been a ...
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- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
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- Kumho Petrochemical, South Korea
- Australian Coal Association
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- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
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- Siam City Cement - Thailand
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
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- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
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- Parry Sugars Refinery, India
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