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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, 01 December 13
PANAMAX RATES HAVE REBOUNDED - CAPT. REDDY
COALspot.com: The freight market was quite firm last week with all the indices increased. Cape Index was gained highest this week which supports inc ...
Saturday, 30 November 13
NTPC STARTED IMPORTING COAL THROUGH NW1 FOR ITS FARAKKA POWER PLANT
COALspot.com: In a pioneering and path breaking operation, the very first consignment of about 69,060 metric tons of imported coal bought by MV HUAY ...
Friday, 29 November 13
DRY BULK MARKET BACK ON HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is strengthening as a result of higher demand for Capesize vessels. The BDI (Baltic Dry Index) was up by 146 points yesterday, e ...
Wednesday, 27 November 13
DRY SEGMENTS EXCEPTION OF PANAMAXES, REMAINED OVERALL STABLE - INTERMODAL
COALspot.com : The Dry Bulk market closed off the week in the red, albeit the decrease noted was of short scale. With the exception of Panamaxes, th ...
Wednesday, 27 November 13
US WHEAT IMPORTS TO BRAZIL, REACHED A 35 - YEAR HIGH - EVA TZIMA
COALspot.com: As I am going through a number of dry market fixtures reported since the beginning of October, my eyes instinctively stop where they d ...
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- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- The University of Queensland
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
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