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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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Monday, 14 April 14
CHINA'S MEASURES TO STIMULATE ECONOMY'S GROWTH COULD OFFER ROOM FOR STABILITY IN SHIPPING MARKETS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Since the outbreak of the 2008-crisis, the shipping industry, in most of its aspects, i.e. dry bulk and tanker markets alike, has been dealing w ...
Sunday, 13 April 14
INDONESIA TO INDIA FREIGHT MARKET DECLINE CONTINUES
COALspot.com: The freight market continued to drop this week and BDI almost touched 1000 points. BDI closed at 1002 points fell 16.85 pct week o ...
Saturday, 12 April 14
HOW DO YOU CALCULATE LOSS OF EARNINGS FOLLOWING A COLLISION? - INCE & CO
KNOWLEDGE TO ELEVATE
The recent case of Astipalaia vs Hanjin Shenzhen [2014] EWHC 120 (Admlty) has revisited the existing case law on asses ...
Friday, 11 April 14
US COAL PRODUCTION IN MARCH INCREASED 9.69% TO 82.6 MMST MONTH ON MONTH
COALspot.com – United States the world's second largest coal producer, produced approximately 19.10 million short tons (mmst) of coal ...
Thursday, 10 April 14
DRY BULK MARKET IS RISING CLAIMS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the recent fall of the Baltic Dry Index (BDI), when one compares the first quarter of 2014, to similar quarters of the recent past, it i ...
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- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Bangladesh Power Developement Board
- The University of Queensland
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
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