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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, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
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- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
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