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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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Thursday, 16 March 17
CAPESIZE: SHOWING STRENGTH; PANAMAX: VERY QUIET - FEARNLEYS
Supramax
The Atlantic market faced less activity from the USG whereas at the Cont tonnage seemed to tighten up with more cargoes emerging. Despit ...
Wednesday, 15 March 17
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
Over the past two weeks, the Dry Baltic Index has been on an upward trend, breaking the 1000 point mark and creating a positive sentiment for the u ...
Tuesday, 14 March 17
ORDERBOOK-TO-FEET RATIO DECREASING; THE FREIGHT MARKET IMPROVING
It seems as though the renewed optimism that has arisen from the recent upward trends being noted in the freight market, the dry bulk market has be ...
Monday, 13 March 17
PORT OF NEWCASTLE HAS SHIPPED 11.563 MILLION TONS COAL IN FEBRUARY 2017; DECLINED 12.19 PERCENT M/M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export ports has shipped $AU 1,4 ...
Monday, 13 March 17
INDO - INDIA COAL FREIGHT RATES STAY FIRM
COALspot.com: The Freight market was continuing to firming up.
The Baltic Exchange, tracking rates for ships carrying dry bulk commodities ros ...
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- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
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