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