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