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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, 04 July 16
BDI ROSE ON STRONGER DEMAND ACROSS ALL VESSEL SEGMENTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 11.16 percent from la ...
Friday, 01 July 16
BREXIT SET TO HURT SHIPPING IN THE LONG-TERM AS IT WILL TAKE ITS TOLL IN THE GLOBAL ECONOMY'S GROWTH - HELLENIC SHIPPING
Setting aside the short-term negative impact of the Brexit, in terms of stock market and currency volatility, it’s more than evident that the ...
Friday, 01 July 16
U.S'S COAL EXPORTS HAVE DECLINED FOR TWELVE QUARTERS IN A ROW - EIA
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.7 million short t ...
Thursday, 30 June 16
CAPE - THIS WEEK'S FREIGHT AND ACTIVITY LEVEL HAVE KEPT STABLE - FEARNLEYS
Cape
This week’s freight and activity level have kept stable. It is support at the present levels and despite a volatile market the freight ...
Thursday, 30 June 16
OIL PRODUCT TANKERS EARNINGS DECLINE AS STOCKBUILDING SLOWS DOWN - BIMCO
BIMCO’s expectations remain as the oil product tanker fleet continues to grow with earnings at the lowest since Q3 in 2014. But there is stil ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- MS Steel International - UAE
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