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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, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
Friday, 28 August 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING AUGUST 22 ROSE FOR THE THIRD STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.5 million shor ...
Friday, 28 August 15
BANPU STRENGTHENS GROWTH PLAN
Coal Business: Asia-Pacific Synergies Increase Competitiveness for Premium Export Market.
Banpu Public Company Limited (BANPU) strengthens its ...
Thursday, 27 August 15
RATES FOR CAPES REMAINED ON A FREE FALL LAST WEEK - INTERMODAL
COALspot.com: Keeping everyone on their toes with the volatility seen in August, the Dry Bulk market undoubtedly remains a steady provider of chall ...
Wednesday, 26 August 15
MARKET INSIGHT - STRATOS TINIAKOS
It’s always interesting to comment on the market when big economies around the world are facing troubling times. Following the collapse of th ...
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- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
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