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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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- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
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