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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, 08 September 21
MARKET INSIGHT - INTERMODAL
Last August was extremely hot in the dry bulk market with rates rising at levels that we have years to witness. The dry bulk index exceeded the 4,0 ...
Wednesday, 01 September 21
KOMIPO TO BUY 1.56 MILLION TONS OF 5600 NAR COAL OF AUSTRALIA OR SOUTH AFRICAN ORIGIN FOR 2022 - 2024
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Wednesday, 01 September 21
MARKET INSIGHT - INTERMODAL
As the summer season is coming to an end, the dry bulk market continues to rally. The confidence that the outstanding freight market performance ha ...
Monday, 30 August 21
68% OF U.S. COAL FLEET RETIREMENTS SINCE 2011 WERE PLANTS FUELED BY BITUMINOUS COAL - EIA
In 2011, the United States had 317.6 gigawatts (GW) of coal-fired electric generation capacity. About 88.7 GW of that capacity was retired in the d ...
Friday, 27 August 21
ALL YOU NEED TO KNOW ABOUT COAL'S MASSIVE RALLY AND NEAR-TERM OUTLOOK - CNBCTV18
Australia’s thermal coal at Newcastle Port, the benchmark for the vast Asian market, has surged over 100 percent this year to trade above $16 ...
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- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- The University of Queensland
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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