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