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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, 13 January 13
THE FREIGHT MARKET: FAIRLY STEADY - VISTAAR
COALspot.com - The freight market was fairly steady with all the indices up with maximum gain in the Panamax segment. The BDI was up by 7.65 pct clo ...
Saturday, 12 January 13
SUB-BIT FOB INDONESIA COAL SWAPS: WEAK
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery has lost 0.32 percent WoW but CFR South China coal ship ...
Saturday, 12 January 13
HIGHER COAL PRICES: SEASONAL EFFECT
COALspot.com : Bahana Securities, one of the leading securities in Indonesia, said in its latest coal outlook that, on US and China&rsquo ...
Friday, 11 January 13
HBA HAS JUMPED BY US$ 5.80 PMT IN JANUARY 2013
COALspot.com - The Indonesian government has declared bench mark price for coal higher than December price. The monthly coal reference price f ...
Thursday, 10 January 13
PANAMAX : SOME GLIMMERS OF HOPE MID WEEK - FEARNLEYS
According to Fearnley’s weekly report, the Atlantic handy market is stable with rates around USD 11k for Cont-Feast and USD 17k bss USG/Feast. ...
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- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
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