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