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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, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- White Energy Company Limited
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- PTC India Limited - India
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
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