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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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Friday, 02 May 14
US WEEKLY COAL PRODUCTION RELATIVELY FLAT AT -0.1%, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
Friday, 02 May 14
DRY BULK MARKET SHOWING SIGNS OF COMEBACK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market which has been hovering below the 1,000-point market (BDI) during the past couple of weeks, could be exhibiting signs of a s ...
Thursday, 01 May 14
INDONESIA EXPORT BAN POINTS TO QUESTIONS OVER CHINA'S LONG-TERM BAUXITE SUPPLY - WOOD MACKENZIE
China’s Bauxite demand forecast to reach 240 million tonnes by 2030
In light of the Indonesian mineral ore ban that came into force o ...
Thursday, 01 May 14
DRY BULK MARKET STILL REELING UNDER PRESSURE FROM VARIOUS FACTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's revival is still overdue, as the industry's benchmark, the BDI is still lagging below the 1,000-point mark. In fac ...
Wednesday, 30 April 14
FREIGHT MARKET FOR DRY BULKERS STILL REMAINS WEAK - INTERMODAL
One week after the Easter holiday and the celebration for the resurrection of Christ, everybody expected to see a similar sign of a revival in t ...
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- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- PTC India Limited - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
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