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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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Sunday, 21 June 15
SPOT RATE AVERAGES FOR FREIGHT FROM INDONESIA TO INDIA REMAIN STRONG THIS WEEK
COALspot.com: The freight market was quite firm this week compared to last week. The BDI was up 21% week on week and closed at 779 points. The cape ...
Friday, 19 June 15
U.S. WEEKLY COAL PRODUCTION UP SLIGHTLY COMPARED TO LAST WEEK; CONTINUES TO BE DOWN FROM LAST YEAR
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 15.4 million short ...
Friday, 19 June 15
INDONESIA'S COAL-TRAFFICKING PROBLEM REQUIRES IMPARTIAL INQUIRY - JAKARTA GLOBE
Indonesia, the leading supplier to the seaborne thermal coal market, produces 420 million tons of coal per year, according to its official tally.
...
Thursday, 18 June 15
DRY BULK SHIPPING: LOWEST FLEET GROWTH IN 10 YEARS MAY NOT PROVE ENOUGH AS DEMAND IS NOT KEEPING PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The demand side of things in the dry bulk market seems unable to keep pace with even the slightest fleet growth, a sign of the demise that the indu ...
Thursday, 18 June 15
THE FAR EAST HANDYSIZE, HANDYMAX, SUPRAMAX MARKET REMAINED STEADY LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market closed off on Friday (last week) noting small gains on the back of stronger performance in the Panamax segment, w ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Minerals Council of Australia
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Singapore Mercantile Exchange
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
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