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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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Sunday, 08 September 13
BALTIC INDEX UP ON HIGHER CAPESIZE, PANAMAX RATES
COALspot.com : The freight market continued saw one of the biggest rally last week with Cape Size taking the lead followed by Panamax.
The BDI wa ...
Friday, 06 September 13
DRY BULK MARKET REACHES NEW YEAR-HIGHS ON THE BACK OF INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been on the rise once again, but this time around any new increase of freight rates translates into new year-highs, thus bri ...
Friday, 06 September 13
US PRODUCED APPROXIMATELY 90.80 MMST OF COAL IN AUGUST
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.90 million short tons (mmst) of ...
Thursday, 05 September 13
INDONESIAN COAL EXPORTS UP BY 6.72 PERCENT IN JULY
COALspot.com: Indonesia, the world's largest multi grade coal exporter shipped 35.268* million tons of coal in July 2013. Indonesian coal exp ...
Thursday, 05 September 13
HANDY: NICKEL ORE WAS PUSHING THE FAR EAST MARKET - FEARNLEYS
Handy
Nickel Ore was pushing the Feast market, several ships were fixed from low teens to $14k. Indo/India was still supported by bauxite, while th ...
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- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
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