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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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Sunday, 02 March 14
THE FREIGHT MARKET WAS STEADY TO FIRM THIS PAST WEEK - CAPT. REDDY
COALspot.com: The freight market was steady to firm this past week. The BDI was up 7.06 pct and closed at 1258 points and the cape index was also fi ...
Friday, 28 February 14
PTBA TO INCREASE ITS COAL TERMINAL'S LOADING CAPACITY TO 25 MILLION TONS PER ANNUM BY JULY 2014
COALspot.com: PT. Bukit Asam (PTBA), the Indonesian government owned coal miner operates several coal mining units in Sumatera as well as in Kaliman ...
Friday, 28 February 14
U.S PRODUCED 1.9% LESS COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 28 February 14
DRY BULK MARKET SLOWLY BUT STEADILY FINDS ITS FOOTING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, hit by the low seasonal demand which is a typical characteristic of the first quarter of each year, is beginning to emerge from ...
Thursday, 27 February 14
PANAMAX : MARKET CONTINUED TO DECLINE IN THE ATLANTIC
Handy
The Atlantic handy/supra market experienced a downward trend this week but not a dramatic one. TA rates are down around USD 800 w-o-w lead b ...
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- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Aditya Birla Group - India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
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