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