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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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Sunday, 20 July 14
THE FREIGHT MARKET CONTINUED ITS DOWNWARD TREND
COALspot.com: The market continued its downward trend this week as all segments were down compared to last week. The Cape and Panamax indices being ...
Friday, 18 July 14
3RD CHINA INTERNATIONAL SHALE GAS SUMMIT
Building on the massive success of the past 2 shale gas programs that has generated huge success by attracting 500+ industry players, and intrig ...
Friday, 18 July 14
US WEEKLY COAL PRODUCTION UP BY 1.4% TO 18.3 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.3 million short tons (mmst) of coal in a ...
Thursday, 17 July 14
PANAMAX : MARKET HAS COOLED DOWN AGAIN TO LOW AND DEPRESSED LEVELS
Handy
The supra market remains pretty flat in the Atlantic while for the smaller sizes there has been little reported with ships chasing business ...
Thursday, 17 July 14
INDIAN GOVERNMENT WISE TO TAKE ADVANTAGE OF CURRENTLY LOW THERMAL COAL PRICES AND SHIPPING RATES - JEFFREY LANDSBERG
With thermal coal import prices (and also shipping rates) very low at present, India's government would be very wise to take advantage of curre ...
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- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- The University of Queensland
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
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