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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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Saturday, 10 August 13
MOODY'S: OUTLOOK FOR US COAL INDUSTRY CHANGES TO STABLE FROM NEGATIVE
Moody's Investors Service has changed its outlook for the US coal industry to stable from negative, the rating agency says in a new report, "U ...
Saturday, 10 August 13
DEMOLITION ACTIVITY TO BE CRUCIAL AGAIN IN PROVIDING SUPPORT TO THE DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We appear to have forgotten demolition activity this year, with the Baltic Dry Index gaining traction in the latter part of the second half and emer ...
Friday, 09 August 13
US PRODUCED 4.00 PERCENT LESS COAL ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.00 million short tons (mmst) of ...
Thursday, 08 August 13
HANDY : NO POSITIVE SENTIMENT FOR THE FAR EAST MARKET - FEARNRESEARCH
Handy
No positive sentiment for the Far East market. There are a number of ships coming open in SE Asia this week and owners rating mid/high USD 8k ...
Thursday, 08 August 13
MALAYSIA HOSTS THIRD ANNUAL ASIAN SUB-BITUMINOUS COAL USERS' GROUP CONFERENCE
Press Release : The third Annual Asian Sub-Bituminous Coal Users’ Group (ASBCUG) conference convenes Sept. 30-Oct. 3 at the Eastern & Orie ...
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- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Economic Council, Georgia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
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