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