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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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Tuesday, 29 January 19
HARD COAL BEARS THE BRUNT OF THE RECOMMENDATIONS OF THE COMMISSION GROWTH STRUCTURAL CHANGE AND EMPLOYMENT - VDKI
Press Release: Hard coal bears the brunt of the recommendations of the Commission Growth Structural change and employment.
In its fi ...
Tuesday, 29 January 19
CHINA HAS BEEN THE TOP DRIVER OF GLOBAL GROWTH FOR NEARLY TWO DECADES - ALLIED
China has been the top driver of global growth for nearly two decades now, pushing demand for seaborne trade and being the key influencer for deman ...
Saturday, 26 January 19
SUPRAMAX: NICKEL ORE RUNS SAW A 56K DWT VESSEL, DELIVERY PHILIPPINES, FIXED FOR A TRIP TO CHINA AT $6K - BALTIC BRIEFING
Capesize
A week of dashed hopes for owners as the optimism evident the previous week evaporated. Rates slipped on all routes and underlying thr ...
Thursday, 24 January 19
ANOTHER DISAPPOINTING WEEK FOR PANAMAX OWNERS; MARKET CONTINUES DOWN IN BOTH BASINS - FEARNLEYS
Capesize
The week has been marked by low activity and dropping rates in both basins. As usual, supply additions have increased at the beginning ...
Thursday, 24 January 19
KOREA SOUTHERN POWER INVITED BIDS FOR 960K MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
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- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
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