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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, 21 March 14
MERCURIA ANNOUNCES ACQUISITION OF J.P. MORGAN PHYSICAL COMMODITIES BUSINESS
COALspot.com: Mercuria Energy Group announced that it has reached a definitive agreement with J.P. Morgan Chase & Co. to acquire its physica ...
Thursday, 20 March 14
CAPESIZE: WEST AUSTRALIA TO CHINA RATES HAVE CLIMBED BACK TOWARD USD 11 PMT - FEARNRESEARCH
Handy
From a slight improvement in the Atlantic to a more mixed picture this mid week. North Atlantic rounds showing softening signs whereas S ...
Wednesday, 19 March 14
INSTEAD OF DECIDING WHETHER THE GLASS IS HALF FULL OR HALF EMPTY, I AM CURRENTLY GLAD THERE IS WATER IN THE GLASS - EVA TZIMA
By Eva Tzima
Research Analyst
Intermodal Research & Valuations
Right when you think that you have all your facts straight, right wh ...
Wednesday, 19 March 14
EUROCOKE SUMMIT 2014
Press Release: ThyssenKrupp, Steel Institute VDEh, SSI and more headline Smithers Apex’s Eurocoke Summit
The leading coke, coal and s ...
Wednesday, 19 March 14
DRY BULK MARKET REBOUND LEADS TO MORE NEWBUILDING ORDERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The steady rise of the dry bulk market, as evidenced by the return, yesterday, of the Baltic Dry Index above the 1,500-point mark (1,518), is fu ...
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- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Central Electricity Authority - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- MS Steel International - UAE
- The University of Queensland
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
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