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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, 20 January 16
SHIPPING MARKET INSIGHT - NASOS SOULAKIS
If you believe in the “January effect”, the theory according to which the beginning of a new year has a positive effect on financial in ...
Tuesday, 19 January 16
HAPPY NEW YEAR, COAL PRODUCERS! OR MAYBE NOT - ANDY ROBERTS
To coal producers, 2015 must have seemed far longer than 365 days. From their perspective, as bad as markets were at the beginning of the year, and ...
Tuesday, 19 January 16
COALTRANS ASIA IS RETURNING TO BALI
22nd Coaltrans Asia
Coaltrans Asia is returning to Bali to bring together over 1000 industry decision makers and thought leaders for three day ...
Monday, 18 January 16
INDONESIAN 5700 GAR COAL INDEX ROSE 0.60% WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline slightly week over week to averaging $39.93 per ton on this past Friday, acc ...
Monday, 18 January 16
BALTIC DRY SHIPPING INDEX DROPS TO 373 POINTS; DECLINE 13% WEEK OVER WEEK
COALspot.com: The freight market dropped this week as the BDI declined further 13 percent to 373 points week over week. The Cape index ...
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- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
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