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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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Wednesday, 20 November 13
PANAMAX MARKET RESUMED ITS NEGATIVE MOVEMENT FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The recovery noted the week prior in the dry Bulk market proved to be short-lived, as the BDI slipped back down to the low 1,500 point ...
Wednesday, 20 November 13
TAIPOWER TO IMPORT 0.825 MMT OF 5000 GAR COAL FOR Q2' 14
COALspot.com: Taiwan Power Company intends to procure 825,000 metric tons of general sub-bituminous coal with calorific value not lesser than 5,000 ...
Wednesday, 20 November 13
CAPES AND PANAMAXES SOFTENING; SMALLER SIZE SEGMENTS FIRMING FURTHER - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable- )
The BDI has closed off the week on the red, with rates for Capes and Panamaxes softening and those fo ...
Tuesday, 19 November 13
INDONESIAN GOVERNMENT'S DECLARED COAL PRICE REFERENCE UP 1.98% IN NOVEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.52 / MT ...
Tuesday, 19 November 13
WEEKLY COAL EXPORTS FROM NEWCASTLE PORT INCREASED BY 20.59%
COALspot.com: In the week ended November 18, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.92& ...
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- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Planning Commission, India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Minerals Council of Australia
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
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