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