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