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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, 20 December 16
TRADE HAS FELT ITS BUMPS AND SHAKES THIS YEAR - GEORGE LAZARIDIS
Trade has felt its bumps and shakes this year, as growing populist protectionist and nationalist movements in the Western world start to take hold. ...
Tuesday, 20 December 16
TURNAROUND IN CHINESE ECONOMY HAS INTENSIFIED RECENTLY, SAYS COMMODORE RESEARCH
According to the most recent Weekly China Report published by Commodore Research, it has remained encouraging that the turnaround in China’s ...
Monday, 19 December 16
U.S. WEEKLY COAL PRODUCTION DOWN 3.1% PERCENT WEEK ON WEEK
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
Monday, 19 December 16
THE FREIGHT MARKET WAS CONTINUING TO SOFTEN
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continually decline this past week and ending on a negati ...
Thursday, 15 December 16
SUPRAMAXES ARE ACHIEVING AROUND HIGH USD 7K FOR INDO/CHINA COAL ROUNDS - FEARNLEY
Supramax
Pacific has been relatively quiet this week, with some softening signs.
Supramaxes are achieving around high USD 7k for Indo/China ...
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- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Australian Coal Association
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- The University of Queensland
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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