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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, 02 May 14
US WEEKLY COAL PRODUCTION RELATIVELY FLAT AT -0.1%, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
Friday, 02 May 14
DRY BULK MARKET SHOWING SIGNS OF COMEBACK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market which has been hovering below the 1,000-point market (BDI) during the past couple of weeks, could be exhibiting signs of a s ...
Thursday, 01 May 14
INDONESIA EXPORT BAN POINTS TO QUESTIONS OVER CHINA'S LONG-TERM BAUXITE SUPPLY - WOOD MACKENZIE
China’s Bauxite demand forecast to reach 240 million tonnes by 2030
In light of the Indonesian mineral ore ban that came into force o ...
Thursday, 01 May 14
DRY BULK MARKET STILL REELING UNDER PRESSURE FROM VARIOUS FACTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's revival is still overdue, as the industry's benchmark, the BDI is still lagging below the 1,000-point mark. In fac ...
Wednesday, 30 April 14
FREIGHT MARKET FOR DRY BULKERS STILL REMAINS WEAK - INTERMODAL
One week after the Easter holiday and the celebration for the resurrection of Christ, everybody expected to see a similar sign of a revival in t ...
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- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- White Energy Company Limited
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
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