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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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Monday, 13 July 15
THE DRY BULK MARKET CLOSED ON A POSITIVE TONE THIS PAST WEEK
COALspot.com: Despite Greece crisis and turmoil in the stock market across the world , the freight market overall was firm and up in all segments t ...
Sunday, 12 July 15
SHIPYARD NOT LIABLE FOR ENGINE ROOM FIRE CAUSED BY OIL LEAKAGE - BIRCH WINDAHL
KNOWLEDGE TO ELEVATE
A Danish vessel owner requested a Danish shipyard to undertake repairs and maintenance works on its vessel. An agreement ...
Saturday, 11 July 15
MAJOR IRANIAN GAS EXPORTS WILL TAKE AT LEAST FIVE YEARS - FITCH
Iran has the long-term potential to become one of the world's top gas producers, thanks to its 34 trillion cubic meters (tcm) of natural gas re ...
Friday, 10 July 15
DRY BULK MARKET KEEPS POSITIVE MOMENTUM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its positive momentum over the course of the past few days, thanks to Panamax gains. During yesterday’s session ...
Friday, 10 July 15
U.S PRODUCED APPROXIMATELY TOTALED AN ESTIMATED 14.1 MMST WEEK OVER WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 14.1 million short ...
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- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- ASAPP Information Group - India
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
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