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