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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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Friday, 12 May 17
SLOW AND UNEVENTFUL WEEK FOR THE PANAMAX MARKET
Supramax
In the Atlantic, only USG were showing some improvement, where pet-coke cargoes to India was fixed in the range of 19-23k daily and to C ...
Wednesday, 10 May 17
MARKET INSIGHT - INTERMODAL
Up until a few weeks ago, demo deals were being concluded at just a fraction below $400/ldt. Last time we saw demo prices around that level was in ...
Tuesday, 09 May 17
DRY BULK TRADE IS STILL HEAVILY RELIANT ON CHINA - GEORGE LAZARIDIS
We have seen an overall cool down in the dry bulk and tanker markets over the final two weeks of April, sparking worries amongst ship-owners that t ...
Monday, 08 May 17
INDONESIAN COAL PRICE REFERENCE RISES FOR SECOND STRAIGHT MONTH IN MAY
COALspot.com: Indonesian government declared coal benchmark price rose in May, government data showed.
The benchmark price of Indonesian therm ...
Monday, 08 May 17
OCEAN BULK CARGO RATES FALL FURTHER THIS PAST WEEK
COALspot.com: The Freight market continues to slump this past week, with all segments show a negative downward trend week over week.
The Balti ...
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- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- White Energy Company Limited
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- PTC India Limited - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- The University of Queensland
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
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