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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, 31 March 13
COAL FREIGHTS ARE IN FLAT TO WEAK TREND - VISTAAR
COALspot.com - This freight market after several weeks of firming up seemed to lose steam and this week all the indices were down except for handy s ...
Friday, 29 March 13
SUB-BIT INDONESIA COAL SWAPS: UP 0.55 % WOW; CFR SOUTH CHINA COAL CONTRACT: UP 0.23 % WOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q2’ 2013 delivery has gained 0.55 percent and CFR South China coal shipment&nbs ...
Thursday, 28 March 13
SHIP OWNERS KEEN ON ACQUIRING SECOND HAND TONNAGE, AS WELL AS NEW BUILDINGS IN CONVENTIONAL SEGMENTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The recent rally of the Baltic Dry Index (BDI), coupled with renewed optimism, at least in some parts of the wet market, have prompted many ship own ...
Wednesday, 27 March 13
PTBA HAS CONCLUDED US$ 16.14 BILLION WORTH OF COAL SALES AND PURCHASE AGREEMENT WITH PLN
COALspot.com - PT. Bukit Asam, a 32 years old Indonesian state owned coal miner has signed a coal sales and purchase agreement with PT PLN, (a state ...
Wednesday, 27 March 13
SHIPPING CONFIDENCE REACHES HIGHEST LEVEL FOR TWO YEARS - MOORE STEPHENS
Overall confidence levels in the shipping industry recovered to their highest level for two years in the three months ended February 2013, according ...
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- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Australian Coal Association
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
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