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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, 01 May 18
SUPRAMAX: COAL RUNS, A 61,000-DWT WAS FIXED BASIS DELIVERY SURABAYA, FOR A TRIP VIA INDONESIA, RE-DELIVERY INDIA AT $15,000 - BALTIC BRIEFING
Capesize
Rates eased in the East, as the week closed out with the momentum slowing. Levels on the key West Australia/China run dropped to $7.25 ...
Tuesday, 01 May 18
GLOBAL MINER PEABODY EYES SALES OPPORTUNITY IN INDIA’S RISING COAL IMPORTS - BUSINESS STANDARD
Indian imports of coal will continue to rise, reckons the world’s largest private sector coal miner Peabody Energy. Glenn Kellow, president a ...
Saturday, 28 April 18
STRONG ASIAN DEMAND CONTINUES TO HOLD UP THERMAL COAL MARKETS - REUTERS
Asian thermal coal demand is defying its typical seasonal slowdown as well as the expanding use of renewables and natural gas, with prices holding ...
Friday, 27 April 18
PEABODY ENERGY'S REVENUES FOR THE FIRST QUARTER ROSE 10 PERCENT OVER THE PRIOR YEAR TO $1.46 BILLION
Peabody Energy's revenues for the first quarter rose 10 percent over the prior year to $1.46 billion driven by improved seaborne coal pricing a ...
Thursday, 26 April 18
BALTIC EXCHANGE LAUNCHES ESCROW SERVICE FOR VESSEL SALES
The Baltic Exchange will be launching an Escrow Service for its members to hold deposits for ship sale transactions. The move will allow Baltic Exc ...
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- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- The University of Queensland
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Australian Commodity Traders Exchange
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