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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, 07 March 14
INDONESIA TO PRODUCE 421 MMT OF COAL IN 2014
Coalspot.com: Indonesia finally agreed to increased 2014 coal output by as much as 6 percent to 421 million metric tons from its previous plan, a se ...
Friday, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
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- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
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