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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, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
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