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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, 20 September 13
DRY BULK MARKET REACHES NEW HEIGHTS THIS WEEK STANDING AT THREE-YEAR HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The biggest rally of the dry bulk market in more than three years have brought back joy among ship owners, especially those active in the Capesize m ...
Friday, 20 September 13
US COAL PRODUCTION SLIGHTLY UP WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer produced totalled approximately 20.30 million short tons (mmst) of ...
Friday, 20 September 13
COLOMBIA SHIPPED 31.14 MILLION TONS OF THERMAL COAL IN H1
COALspot.com : Colombia’s coal exports fell by 20.59 percent in June 2013 compared to Colombia’s May's export of 7,633,579 MT.
Colom ...
Thursday, 19 September 13
CAPESIZE : AVERAGE DAILY EARNINGS HAVE GAINED ALMOST USD 6K WOW - FEARNLEYS
Handy
The rates in Feast are still firm this week even the activity calmed down a bit as chrtrs are not in a rush to cover even their end Sept carg ...
Wednesday, 18 September 13
IRON ORE AND ZINC ARE BEST PERFORMING MINING SECTORS IN CURRENT LOW PRICE, HIGH COST ENVIRONMENT - WOOD MACKENZIE
With the fall in commodity prices, cash margins in the mining industry have come under pressure. Accordingly, producers and investors are placing in ...
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- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
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