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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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Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
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- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
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