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