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