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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, 24 November 13
SUPRAMAX FREIGHT RATES REMAINED FIRM FROM INDONESIA TO INDIA AND CHINA - SOLYM
COALspot.com: The freight market was fairly steady except for the Supramax in SE Asia region which continued to remain firm. The BDI was down by 1.5 ...
Friday, 22 November 13
DRY BULK MARKET STILL LACKLUSTRE, DESPITE PROJECTIONS OF A NEW RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We might still be about six weeks far from the end of the year, but the projected by many analysts upcoming rally of the dry bulk market, hasn't ye ...
Friday, 22 November 13
US COAL PRODUCTION DOWN 1.3% W-W
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Thursday, 21 November 13
TAIPOWER TO PROCURE 750K MT OF 5500 GAR BITUMINOUS COAL FOR MAY - AUGUST 2014
COALspot.com: Taiwan Power Company intends to procure 750,000 metric tons of bituminous coal with calorific value not lesser than 5,500 kcal/kg on a ...
Thursday, 21 November 13
CAPESIZE : THE DOWNWARD TREND HAS TURNED INTO NOTABLE SPOT AND PERIOD IMPROVEMENT - FEARNLEYS
Handy
The Atlantic market experienced a general rate increase for most trades this week. More cargoes in the market and chrts looking for prompt t ...
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- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Planning Commission, India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Australian Coal Association
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
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