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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, 08 August 14
CAPESIZE RATES ARE REMAINING MORE OR LESS UNCHANGED AT BOTTOM LOW LEVELS - FEARNLEYS AS
Handy
An improving sentiment with stronger rates and fair demand for prompt tonnage in the Atlantic, both on the Continent and in the Med for the ...
Friday, 08 August 14
U.S PRODUCED 35.80 MMST OF COAL IN JULY; UP 7.89 MONTH OVER MONTH
COALspot.com – United States the world's second largest coal producer, produced approximately 19.50 million short tons (mmst) of coal in ...
Friday, 08 August 14
PORT OF NEWCASTLE SHIPPED 19.52% MORE COAL IN JULY FROM LAST MONTH
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped 14,036,947 t ...
Thursday, 07 August 14
SHORT-TERM COAL OUTLOOK IMPROVES - SAM QUEST
With demand for and supply of coal to grow in the near future, prices are expected to rebound in the short term; the long-term prospects, however, ...
Thursday, 07 August 14
BULKING UP IN AFRICA: CHINA INFLATES SEABORNE MINERALS EXPORT TRADE - RICHARD SCOTT
Africa’s profile as an exporter of dry bulk commodities is rising. Responding to growing import demand from China, India and other buyers in ...
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- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
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