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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, 14 March 14
US, THE WORLD'S SECOND LARGEST COAL PRODUCER MINED 75.3 MMST OF COAL IN FEBRUARY; DOWN 10.88% M-M
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.7 million short tons (mmst) of coal ...
Thursday, 13 March 14
HANDY: THE FAR EAST MARKET IS IN AN UPWARD TREND - FEARNRESEARCH
Handy
Atlantic is a bit under pressure for spot tonnage, but the underlying sentiment is positive for the short medium future. 2-3 legs are do ...
Thursday, 13 March 14
MARKET INSIGHT - CHRISTOPHER T. WHITTY
By Christopher T. Whitty
Marketing Manager
Cotzias Intermodal Shipping Inc.
During the last year we have noticed that a fair number of ...
Wednesday, 12 March 14
ADARO ENERGY IMPROVES EFFICIENCY AND GENERATED STRONG EBITDA IN 2013
COALspot.com: PT Adaro Energy Tbk, Indonesia's single largest coal miner posted revenue of US$ 3.28 billion and cost of revenue of US$ 2.54 ...
Wednesday, 12 March 14
DGOMC OF INDONESIA REVISED DOWN THE BENCHMARK PRICES FOR COAL BY 4.26% IN MARCH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised down the government's declared coal bench mark price ...
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- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- The University of Queensland
- Indian Oil Corporation Limited
- White Energy Company Limited
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Australian Coal Association
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
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