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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, 07 October 16
INDONESIA'S DEMAND FOR COAL REMAINS STRONG: BP
Indonesia's domestic demand for coal shows no sign of slowing down as the country is banking on its coal abundance to meet the country' ...
Friday, 07 October 16
CEYLON SHIPPING CORPORATION HAS TAKEN DELIVERY OF COAL CARRIER MV.CEYLON PRINCESS
Sri Lanka’s Ceylon Shipping Corporation (CSC) has taken delivery of its second newly built bulk carrier for the transportation of coal to pow ...
Friday, 07 October 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 540.5 MMST; DOWN 21.9% Y-O-Y, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.7 million short ton ...
Thursday, 06 October 16
SHIPS IN PACIFIC ACHIEVE JUST ABOVE $10K DAILY FOR A BRAZIL ROUND VOYAGE - FEARNLEYS
Supramax
Slower week with limited activity due to holidays in the East. Mixed feelings within different markets, with slight downturn in Pacific ...
Wednesday, 05 October 16
OPEC TO SHUT OFF MORE THAN 6 PERCENT OF ITS PRODUCTION; MIXED FEELING AMONGST TRADERS - ALLIED
OPEC recent accord to shut off more than 6 percent of its production this past week has been met with mixed feeling amongst traders. As we mo ...
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- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
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- SMC Global Power, Philippines
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- Sojitz Corporation - Japan
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- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
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- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
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- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
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- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
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- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
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- Independent Power Producers Association of India
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- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
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- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
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- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- The University of Queensland
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- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
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- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
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- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
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- Economic Council, Georgia
- Power Finance Corporation Ltd., India
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