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