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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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Monday, 23 January 17
THE FREIGHT MARKET DID NOT CHANGE MUCH AND WAS ALMOST AT SAME LEVELS AS LAST WEEK
COALspot.com: The Freight market did not change much and was almost at same levels as last week.
The Baltic Exchange, tracking rates for ships ...
Friday, 20 January 17
U.S. WEEKLY COAL OUTPUT ESTIMATED 15.7 MMST; UP 14.1% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
Thursday, 19 January 17
KOREAN POWER UTILITY BORYEONG POWER TO IMPORT 660K TONS OF BITUMINOUS COAL FOR MARCH 2017
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 590,000 Metric Tons of Bituminous coal and 7000 ...
Thursday, 19 January 17
PANAMAX RATES ARE UNDER PRESSURE IN BOTH HEMISPHERES - FEARNLEYS
Supramax
The market remained flat and the week continued at the same pace as last.
According to Fearnleys weekly dry bulk report, still more ...
Wednesday, 18 January 17
TANKER: THE CLEAN PRODUCT MARKET IS STILL NOT GIVING US ANY CLEAR SIGNS OF RECOVERY - GEORGE VASTARDIS
While we are approaching the Chinese New Year, the Clean Product market is still not giving us any clear signs of recovery, especially on The East ...
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- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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