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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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Friday, 18 March 16
OUTLOOK ON GLOBAL SHIPPING SECTOR TURNS NEGATIVE AS SUPPLY-DEMAND GAP WIDENS AND EBITDA DECLINES - MOODY'S
Moody’s Investors Service (Moody’s) has changed its outlook on the global shipping sector to negative as it expects supply growth to ou ...
Friday, 18 March 16
DRY BULK MARKET HAS LITTLE TO LOOK FORWARD TO FROM CHINA AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s rebound is long overdue, but when it comes, it won’t be because of China’s strong demand for commodities, o ...
Friday, 18 March 16
COAL PRODUCTION IN THE UNITED STATES SLIGHTLY DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.5 million shor ...
Thursday, 17 March 16
THE PANAMAX MARKET SEEMS TO BE A BIT TOPPISH THIS WEEK - FEARNLEYS
Cape
There are challenging days with rates or less unchanged from last week; West Australia to China still below US$ 3 pmt, and Tuarao to China i ...
Wednesday, 16 March 16
OIL SUPPLY OUTPACES DEMAND ON ANY GIVEN DAY, AND BILLIONS OF BARRELS OF OIL ARE BEING STORED RATHER THAN CONSUMED - CHRISTOPHER
Oil producers have turned to the concept of limiting their output to January levels as a certain form of action to boost prices that have fallen mo ...
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- The Treasury - Australian Government
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- The University of Queensland
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
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