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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, 27 June 16
THE BDI UP 3.75 PERCENT ; BCI FELL 1.51% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.75 percent from las ...
Monday, 27 June 16
INDONESIA BANS (AGAIN) SHIPS SAILING TO THE PHILIPPINES FROM INDONESIA
COALspot.com: The Indonesian Transport Ministry strictly prohibited harbour masters issuing permits to all Indonesian-flagged vessels bound for the ...
Friday, 24 June 16
U.S WEEKLY COAL PRODUCTION UP MARGINALLY
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.4 million short tons ...
Wednesday, 22 June 16
SMALL RISE IN SHIPPING CONFIDENCE - MOORE STEPHENS
In May 2016, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). ...
Wednesday, 22 June 16
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Stagnation- With the BDI stuck in the low 600 points for almost a month now, if we had to choose a word to describe the state of the Dry Bulk freig ...
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- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- MS Steel International - UAE
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Posco Energy - South Korea
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- The University of Queensland
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Australian Coal Association
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
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