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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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Wednesday, 02 July 14
THE PANAMAX MARKET CONTINUED TO BLEED FOR ANOTHER WEEK - INTERMODAL
COALspot.com: The Dry Bulk market succumbed to mounting pressure this past week, while the Capesize market proved unable to “save the day&rdq ...
Wednesday, 02 July 14
HANDY BULKERS PROVE TO BE THE MOST SOUGHT AFTER VESSELS OVER THE PAST WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Handy dry bulker proved to be the most sought after ship by ship owners active in the second hand market, which saw a slight decline in terms o ...
Wednesday, 02 July 14
SHIPPING: MARKET INSIGHT - GEORGE DERMATIS
After 6 months, 57 ministerial meetings and 67 political agreements, the journey of the Greek Presidency in the EU reached its end yesterday; only ...
Tuesday, 01 July 14
INDIAN POWER PLANT COAL STOCKPILES VERY LOW
COALspot.com: According to today's Weekly Dry Bulk Report published by Commodore Research, Indian power plant coal stockpiles have now fallen t ...
Monday, 30 June 14
SUB-BIT FOB INDONESIA COAL PRICES ARE STILL STRUGGLING TO RECOVER
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on week and on month according to AsiaClear OTC coal swap's reports release ...
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- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- MS Steel International - UAE
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Australian Coal Association
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
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