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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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Sunday, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
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- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
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