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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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- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
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- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
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- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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