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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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Friday, 22 August 14
U.S WEEKLY COAL PRODUCTION UP 2.4% WEEK OVER WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.60 million short tons (mmst) of coal in ...
Thursday, 21 August 14
PREDICTIONS FROM VARIOUS SHIPPERS AND MINING INDUSTRY FOR 2ND HALF YEAR AND ESPECIALLY Q4 IS POSITIVE
Handy
The activity has increased in both hemispheres this week and we see rates edging up on all trades. TA´s are now paying around 8k whic ...
Thursday, 21 August 14
SHIP OWNERS KEEP SHYING AWAY FOR NEW SHIP INVESTMENTS, OVERALL TREND IS DOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have remained in the sidelines of the Sale & Purchasing market for second hand vessels, during most of August, while they also slow ...
Wednesday, 20 August 14
DRY BULK MARKET TO REBOUND IN THE FOURTH QUARTER, OR NOT....- NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The projected rebound of the dry bulk market is still an elusive trend and shipbrokers and analysts are looking to identify the timing of the loomi ...
Monday, 18 August 14
CAPESIZE RATES TO RISE TO MUCH HIGHER LEVELS THIS YEAR - JEFFREY LANDSBERG
COALspot.com: Capesize rates ended last week at $15,561/day, which marked a week-on-week increase of $6,167 (66%). Capesize rates have been a ...
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- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Planning Commission, India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- The University of Queensland
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
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