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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, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
Friday, 07 June 13
MEDITERRANEAN COAL MARKETS
Press Release: 3rd International Conference Mediterranean Coal Markets will be held on 16-17th of September 2013, Istanbul, Turkey, Ceylan Intercont ...
Friday, 07 June 13
US'S COAL PRODUCTION INCREASED BY 0.54 PER CENT THE WEEK ENDED JUNE 1
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.60 million short tons (mmst) of ...
Thursday, 06 June 13
WE ARE SEEING SOME FRESH INDO COAL TO CHINA AND INDIA - FEARNRESEARCH
Handy
In the Atlantic, the Gulf remains firm for the next week with a few orders in the market. The Supramaxes are seeing around low 20k for fronth ...
Wednesday, 05 June 13
DON'T AVOID PAYING COAL ROYALTY TO THE GOVERNMENT - INDONESIAN ENERGY MINISTER
COALspot.com – “Every country has the right to make policies to protect their national interests”, Energy and Mineral Resources Mi ...
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- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Planning Commission, India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Deloitte Consulting - India
- The University of Queensland
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