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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, 03 October 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
The bunker fuel supply and availability landscape is close to its transformation with the enforcement of the IMO’s global 0.5% fuel Sulphur c ...
Tuesday, 02 October 18
PANAMAX: A FURTHER RISE ACROSS ALL MAIN ROUTES THIS WEEK - ALLIED
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Tuesday, 02 October 18
INDONESIA GETS READY TO MEET INCREASED COAL DEMAND FROM CHINA, FREIGHT TO RESPOND - MIKAL BOE
Indonesian coal suppliers have increased their domestic coal production target by 4.5 percent from a previous 485 million tonnes to a massive 507 m ...
Monday, 01 October 18
SUPRAMAX: A 56,000 DWT FIXED DELIVERY FOR A SURABAYA TRIP WITH REDELIVERY TO WEST COAST INDIA AT $13,500 - THE BALTIC BRIEFING
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A stop-start market for the big ships with many expectations and few fulfilled. Holidays curtailed trading early in the week, but the ...
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- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Economic Council, Georgia
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Planning Commission, India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
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