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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, 10 November 16
WILL TRUMP VICTORY PROVIDE A BOOST FOR HYDROCARBON & COAL INDUSTRIES? - DOUGLAS-WESTWOOD
Donald Trump’s surprise victory ends months of an adversarial presidential campaign with bitter disagreements between the two major candidate ...
Thursday, 10 November 16
PANAMAX: NO TRUMP INFLUENCE YET, AND THE MARKET IS HEADING NORTH - FEARNLEYS
Supramax
Pacific Supra market still soft and falling this week, although seems to be in a somewhat slower pace compared to last week. According t ...
Wednesday, 09 November 16
SINGAPORE'S SGX COMPLETES ACQUISITION OF LONDON'S BALTIC EXCHANGE
COALspot.com: Singapore Exchange Limited and The Baltic Exchange Limited together announced that the acquisition of the Baltic Exchange by SGX has ...
Wednesday, 09 November 16
SUPRAMAX: 50% INCREASE ON AVERAGE SINCE THE FIRST QUARTER OF THE YEAR - GIANNIS ANDRITSOPOULOS
Last week was an interesting one for the tanker market, which following the explosion of the gas pipeline in Alabama witnessed a spike in Atlantic ...
Tuesday, 08 November 16
S.KOREA'S KOMIPO ISSUES TENDER TO BUY 390K TONS OF BITUMINOUS COAL FOR JAN-FEB 2017
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 390,000 Metric Tons of Bituminous Coal for its B ...
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- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Australian Coal Association
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- The University of Queensland
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
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