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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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Wednesday, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
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- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
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