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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, 18 October 13
WOOD MACKENZIE FORECASTS CHINA WILL OUTWEIGH THE REST OF THE WORLD FOR BASE METALS DEMAND BY 2017
China set to account for 52% of 117mt base metals market by 2017
China is on track to exceed rest of the World demand by 2017, becoming the singl ...
Friday, 18 October 13
DRY BULK MARKET ON "PAUSE" MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on "pause" mode over the past week, after China's return from the week long holidays. The industry's benchm ...
Friday, 18 October 13
US PRODUCED 6.7% MORE COAL W-W
COALspot.com – United States the world’s second largest coal producer produced approximately 18.9 million short tons (mmst) of coal in a ...
Thursday, 17 October 13
CAPESIZE: RATES ARE AGAIN MOVING UPWARDS - FEARNRESEARCH
Handy
Activities were obviously slowed down in the Pacific basin. There were only few coal movements which fixed around USD 15-16k for ships in Sin ...
Thursday, 17 October 13
SGX TO LAUNCH "SGX THERMAL COAL FUTURES" NEXT MONDAY
COALspot.com: SGX is to launch two thermal coal futures contracts, SGX API 8 CFR China Coal Index Futures and SGX IHS McCloskey Indonesian Sub-bit F ...
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- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
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