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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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Thursday, 12 June 14
HANDY : TA MARKET IS CONTINUING SOUTH WITH A DECREASE OF 26% W-O-W
Handy
The week started off with holidays in most European countries and the TA market is continuing south with a decrease of 26% w-o-w. We do see ...
Thursday, 12 June 14
CONSOLIDATION IS THE ' NAME OF THE GAME' WHEN IT COMES TO SHIPYARDS ACROSS ASIA - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Intense competition, a swelling of new greenfield shipyards over the past few years mainly in China, especially prior to the 2008 global financial ...
Wednesday, 11 June 14
INDONESIA'S COAL EXPORT VOLUME AND REVENUE SLIPS 2.75% AND 6.73% RESPECTIVELY IN APRIL
COALspot.com: Indonesia, one of the world's largest coal producer and the global largest multi grade coal exporter shipped around $1.8* b ...
Wednesday, 11 June 14
BPI TOUCHING A NEW LOW FOR THE YEAR
The Dry Bulk market closed off the week positively, on the back of firming Capesize rates, while the market overall continues to face a very challe ...
Monday, 09 June 14
GOVT GETS TOUGH ON ILLEGAL MINING, SUSPENDS LICENSES - THE JAKARTA POST
The government has temporarily suspended the licenses of 62 mineral and coal transportation companies as part of its efforts to curb illegal mining ...
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- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
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