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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, 08 August 14
CAPESIZE RATES ARE REMAINING MORE OR LESS UNCHANGED AT BOTTOM LOW LEVELS - FEARNLEYS AS
Handy
An improving sentiment with stronger rates and fair demand for prompt tonnage in the Atlantic, both on the Continent and in the Med for the ...
Friday, 08 August 14
U.S PRODUCED 35.80 MMST OF COAL IN JULY; UP 7.89 MONTH OVER MONTH
COALspot.com – United States the world's second largest coal producer, produced approximately 19.50 million short tons (mmst) of coal in ...
Friday, 08 August 14
PORT OF NEWCASTLE SHIPPED 19.52% MORE COAL IN JULY FROM LAST MONTH
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped 14,036,947 t ...
Thursday, 07 August 14
SHORT-TERM COAL OUTLOOK IMPROVES - SAM QUEST
With demand for and supply of coal to grow in the near future, prices are expected to rebound in the short term; the long-term prospects, however, ...
Thursday, 07 August 14
BULKING UP IN AFRICA: CHINA INFLATES SEABORNE MINERALS EXPORT TRADE - RICHARD SCOTT
Africa’s profile as an exporter of dry bulk commodities is rising. Responding to growing import demand from China, India and other buyers in ...
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- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Marubeni Corporation - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
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