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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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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- The Treasury - Australian Government
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- The University of Queensland
- Indian Oil Corporation Limited
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