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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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Wednesday, 11 May 16
MARKET INSIGHT - KATERINA RESTIS
On Saturday 7th May, Riyadh replaced the long-serving oil minister of more than two decades, Ali-Al-Naimi, as part of a major government overhaul, ...
Tuesday, 10 May 16
VOLATILITY? VARIATION NO ENIGMA TO SHIPPING..... - CLARKSONS
Along with cyclicality, the other characteristic of the shipping markets which receives frequent mention is volatility. This is so evident that the ...
Monday, 09 May 16
INDONESIAN CS COAL INDICES UP CONTINUES; POSITIVE DIRECTION
COALspot.com: Average 5000 GAR coal index of Indonesian origin up 0.10 percent week over week to averaging $38.82 per ton on this past Wednesday, a ...
Monday, 09 May 16
DRY BULK SHIPPING TO WITNESS STEADY PROGRESS MOVING FORWARD ON THE BACK OF GROWING TRADE VOLUMES - BIMCO
In its latest short-term analysis of the shipping markets, BIMCO reiterated its optimism on the prospects of the dry bulk market moving forward. Ac ...
Monday, 09 May 16
BALTIC DRY INDEX ENDS WEEK ON A NEGATIVE NOTE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
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- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- White Energy Company Limited
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Planning Commission, India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- PTC India Limited - India
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
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