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