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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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Monday, 21 April 14
DRY BULK MARKET UPS AND - MOST RECENTLY - DOWNS OFFERS NO ROOM FOR RELAXING AMONG DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's latest demise, with the market retrating once again, since the end of March, has come at a time, when most ship owners ...
Sunday, 20 April 14
FREIGHT RATES END WEEK ON WEAK NOTE - VISTAAR
Wish you all Happy Easter.
The freight market continued to its downwards as BDI was fell 7.187 percent to 930 points week on week.
The ...
Friday, 18 April 14
US WEEKLY COAL PRODUCTION DECLINED BY 1% TO 18.9 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Thursday, 17 April 14
DRY BULK MARKET ON RETREAT MODE, WHILE NEWBUILDING ORDERING ACTIVITY STALLS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating this week, a pattern which emerged since late March. Yesterday the BDI (Baltic Dry Index) ended yet a ...
Wednesday, 16 April 14
INDONESIA'S FEBRUARY 2014 COAL EXPORT VOLUME FELL 2.41%
COALspot.com: Indonesia, the world 4th largest coal producer and the global largest multi grade coal exporter shipped around $1.77* billio ...
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- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Marubeni Corporation - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Planning Commission, India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
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