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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, 20 July 14
THE FREIGHT MARKET CONTINUED ITS DOWNWARD TREND
COALspot.com: The market continued its downward trend this week as all segments were down compared to last week. The Cape and Panamax indices being ...
Friday, 18 July 14
3RD CHINA INTERNATIONAL SHALE GAS SUMMIT
Building on the massive success of the past 2 shale gas programs that has generated huge success by attracting 500+ industry players, and intrig ...
Friday, 18 July 14
US WEEKLY COAL PRODUCTION UP BY 1.4% TO 18.3 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.3 million short tons (mmst) of coal in a ...
Thursday, 17 July 14
PANAMAX : MARKET HAS COOLED DOWN AGAIN TO LOW AND DEPRESSED LEVELS
Handy
The supra market remains pretty flat in the Atlantic while for the smaller sizes there has been little reported with ships chasing business ...
Thursday, 17 July 14
INDIAN GOVERNMENT WISE TO TAKE ADVANTAGE OF CURRENTLY LOW THERMAL COAL PRICES AND SHIPPING RATES - JEFFREY LANDSBERG
With thermal coal import prices (and also shipping rates) very low at present, India's government would be very wise to take advantage of curre ...
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- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
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