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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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Tuesday, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of global ...
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculati ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
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- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Carbofer General Trading SA - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Australian Coal Association
- Singapore Mercantile Exchange
- The University of Queensland
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
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