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