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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, 28 June 13
U.S. PRODUCED 1.52 PERCENT LESS COAL WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.40 million short tons (mmst) of ...
Thursday, 27 June 13
US COAL EXPORTS BEATS CHINESE COAL IMPORTS AS THE MOST INFLUENTIAL COAL TRADE - BIMCO
The influence of American coal exports on seaborne transportation has grown significantly over the past decade. In 2002, the US exported 20.1 millio ...
Thursday, 27 June 13
HANDY : USD 12000 FOR SPOT COAL INDO/CHINA AND AROUND USD 13000 INDO/ECI - FEARNLEYS
Handy
Atlantic rates hold well. Continent to Far East is worth more than USD 14k daily whilst USG to Far East pay 23/24k a day. On the route from B ...
Thursday, 27 June 13
DRY BULK CARRIERS DOMINATE NEWBUILDING ORDERS AS SHIP OWNERS ARE ENCOURAGED BY LATEST FREIGHT RATE RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Newbuilding orders for dry bulk carriers were already high, compared to last year, prior to the latest rally of the Baltic Dry Index (BDI), which ha ...
Tuesday, 25 June 13
CAPESIZE MARKET TO REMAIN BULLISH SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been experiencing its long-awaited rally, with the Baltic Dry Index, the industry's benchmark rising to healthier levels fo ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
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- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
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- Chamber of Mines of South Africa
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- Bayan Resources Tbk. - Indonesia
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- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
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- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
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- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
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- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- The University of Queensland
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
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