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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, 21 May 14
SHIPPING: MARKET INSIGHT - GEORGE LAZARIDIS
The recent revision by the OECD of its global growth forecast has sparked a debate as to the potential outcome these new figures will have on seabo ...
Tuesday, 20 May 14
NEWCASTLE'S COAL EXPORT VOLUME UP 39.11 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 19 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, ...
Tuesday, 20 May 14
DRY BULK MARKET TO IMPROVE OVER THE COURSE OF 2014, BUT OVERSUPPLY STILL AN ISSUE SAYS BIMCO'S CHIEF SHIPPING ANALYST
As a gruelling first quarter edges closer to the end, dry bulk ship owners are looking at an improved second quarter demand, which, coupled with sl ...
Tuesday, 20 May 14
DRY BULK MARKET IS BOUND FOR A RECOVERY CLAIMS PARAGON SHIPPING'S HEAD MICHAEL BODOUROGLOU
The dry bulk market is bound for a recovery in the coming weeks, as the market will be better balanced, said Mr. Michael Bodouroglou, Chairman and ...
Monday, 19 May 14
INDO COAL SWAPS FOR AVERAGE Q3' 2014 DELIVERY LOST ON WEEK AND ON MONTH
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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- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Australian Coal Association
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
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