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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, 25 July 16
STRONG BUYER DEMAND PUSHING UP INDONESIAN THERMAL COAL INDICES
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.73 percent week over week to averaging $40.83 per ton this past week, shows C ...
Monday, 25 July 16
THE BDI FELL ON WEAKER RATES FOR CAPESIZE & PANAMAX VESSELS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities slide slightly as Cape and Panamax segments ending in neg ...
Friday, 22 July 16
U.S COAL OUTPUT ROSE 17.2% WEEK OVER WEEK - EIA
COALspot.com – U.S, world’s second largest coal producers has produced approximately totalled an estimated 15.1 million short tons (mms ...
Thursday, 21 July 16
WHAT TO DO WHEN YOU DON'T GET PAID - SHIPOWNERS CLUB
Present market conditions have led to an increase in claims related to unpaid hire. To recover unpaid hire, Owners need to fully understand who the ...
Thursday, 21 July 16
CONSTRUCTIVE TOTAL LOSS: WHAT GOES IN TO CALCULATING QUANTUM? - HILL DICKINSON
KNOWLEDGE TO ELEVATE
The Commercial Court recently delivered its judgment in an important case (Connect Shipping Inc and Machrimar Management ...
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- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
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