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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, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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