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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, 21 March 14
MERCURIA ANNOUNCES ACQUISITION OF J.P. MORGAN PHYSICAL COMMODITIES BUSINESS
COALspot.com: Mercuria Energy Group announced that it has reached a definitive agreement with J.P. Morgan Chase & Co. to acquire its physica ...
Thursday, 20 March 14
CAPESIZE: WEST AUSTRALIA TO CHINA RATES HAVE CLIMBED BACK TOWARD USD 11 PMT - FEARNRESEARCH
Handy
From a slight improvement in the Atlantic to a more mixed picture this mid week. North Atlantic rounds showing softening signs whereas S ...
Wednesday, 19 March 14
INSTEAD OF DECIDING WHETHER THE GLASS IS HALF FULL OR HALF EMPTY, I AM CURRENTLY GLAD THERE IS WATER IN THE GLASS - EVA TZIMA
By Eva Tzima
Research Analyst
Intermodal Research & Valuations
Right when you think that you have all your facts straight, right wh ...
Wednesday, 19 March 14
EUROCOKE SUMMIT 2014
Press Release: ThyssenKrupp, Steel Institute VDEh, SSI and more headline Smithers Apex’s Eurocoke Summit
The leading coke, coal and s ...
Wednesday, 19 March 14
DRY BULK MARKET REBOUND LEADS TO MORE NEWBUILDING ORDERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The steady rise of the dry bulk market, as evidenced by the return, yesterday, of the Baltic Dry Index above the 1,500-point mark (1,518), is fu ...
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- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- PTC India Limited - India
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
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