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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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Wednesday, 02 July 14
THE PANAMAX MARKET CONTINUED TO BLEED FOR ANOTHER WEEK - INTERMODAL
COALspot.com: The Dry Bulk market succumbed to mounting pressure this past week, while the Capesize market proved unable to “save the day&rdq ...
Wednesday, 02 July 14
HANDY BULKERS PROVE TO BE THE MOST SOUGHT AFTER VESSELS OVER THE PAST WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Handy dry bulker proved to be the most sought after ship by ship owners active in the second hand market, which saw a slight decline in terms o ...
Wednesday, 02 July 14
SHIPPING: MARKET INSIGHT - GEORGE DERMATIS
After 6 months, 57 ministerial meetings and 67 political agreements, the journey of the Greek Presidency in the EU reached its end yesterday; only ...
Tuesday, 01 July 14
INDIAN POWER PLANT COAL STOCKPILES VERY LOW
COALspot.com: According to today's Weekly Dry Bulk Report published by Commodore Research, Indian power plant coal stockpiles have now fallen t ...
Monday, 30 June 14
SUB-BIT FOB INDONESIA COAL PRICES ARE STILL STRUGGLING TO RECOVER
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on week and on month according to AsiaClear OTC coal swap's reports release ...
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- Ministry of Mines - Canada
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- The University of Queensland
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
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