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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, 11 July 16
THE MAIN SEA FREIGHT INDEX, BDI ROSE FURTHER ON 8 JULY DUE TO STRONG DEMAND FOR PANAMAX SHIPS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.84 percent from las ...
Monday, 11 July 16
DRY BULK MARKET: UP TO 30 MILLION DWT OF OLDER BULKERS WILL NEED TO BE SCRAPPED BY END OF 2017 FOR MARKET TO FIND BALANCE
Tonnage oversupply in the dry bulk market is more than evident, as newbuildings have been hitting the water faster than owners can scrap their olde ...
Friday, 08 July 16
U.S. WEEKLY COAL OUTPUT UP 3% TO 14.1 MMST - EIA
COALspot.com – U.S, world’s second largest coal producers has produced approximately totalled an estimated 14.1 million short tons (mms ...
Thursday, 07 July 16
PANAMAX : THE TENDENCY FROM LAST WEEK CONTINUES WITH A CONSIDERABLY STRONGER SENTIMENT ALL ACROSS THE BLOCK - FEARNLEYS
Capesize
Rates have been holding at steady levels over the last weeks but towards end of this period they are becoming under more pressure as gen ...
Thursday, 07 July 16
CONSOLIDATION TO RULE OVER SHIPPING, AS EXECUTIVES SEEK INVESTMENT OPPORTUNITIES IN CHINA, INDIA AND EUROPE SAYS NORTON ROSE SURVEY
The transport sector is looking to Asia Pacific as the key market for investment over the next five years, according to the seventh The way ahead T ...
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- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- The University of Queensland
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Australian Coal Association
- Planning Commission, India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
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