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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, 07 March 14
INDONESIA TO PRODUCE 421 MMT OF COAL IN 2014
Coalspot.com: Indonesia finally agreed to increased 2014 coal output by as much as 6 percent to 421 million metric tons from its previous plan, a se ...
Friday, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
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- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- The University of Queensland
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Parliament of New Zealand
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Planning Commission, India
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
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