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