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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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Saturday, 28 March 15
THE DRY BULK FLEET AT BREAKING POINT - CLARKSONS
The severe oversupply in the bulkcarrier fleet has contributed to the current trough in the dry bulk market, putting considerable financial pressur ...
Friday, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately totaled an estimated 18.2 million ...
Thursday, 26 March 15
CHINA IRON ORE IMPORT FOR THE FIRST 2 MONTHS DECLINED BY 1.2 % Y-O-Y; PANAMAX AUSSIE/CHINA ROUNDS BEING FIXED IN THE $4 -5K RANGE - FEARNLEYS
Handy
There has been more activity in both hemispheres this week. Especially the USG market has picked up with more cargoes for prompter dates en ...
Thursday, 26 March 15
RATES FOR THE SMALLER SIZE SEGMENT CONTINUED TO IMPROVE LAST WEEK - INTERMODAL
To see green across the board is a rare occurrence in the Dry Bulk market nowadays and while the upside in which last week closed off is not of the ...
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- Petron Corporation, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
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- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
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- White Energy Company Limited
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
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