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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, 21 May 14
SHIPPING: MARKET INSIGHT - GEORGE LAZARIDIS
The recent revision by the OECD of its global growth forecast has sparked a debate as to the potential outcome these new figures will have on seabo ...
Tuesday, 20 May 14
NEWCASTLE'S COAL EXPORT VOLUME UP 39.11 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 19 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, ...
Tuesday, 20 May 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with sl ...
Tuesday, 20 May 14
DRY BULK MARKET IS BOUND FOR A RECOVERY CLAIMS PARAGON SHIPPING'S HEAD MICHAEL BODOUROGLOU
The dry bulk market is bound for a recovery in the coming weeks, as the market will be better balanced, said Mr. Michael Bodouroglou, Chairman and ...
Monday, 19 May 14
INDO COAL SWAPS FOR AVERAGE Q3' 2014 DELIVERY LOST ON WEEK AND ON MONTH
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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- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
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