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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, 24 November 13
SUPRAMAX FREIGHT RATES REMAINED FIRM FROM INDONESIA TO INDIA AND CHINA - SOLYM
COALspot.com: The freight market was fairly steady except for the Supramax in SE Asia region which continued to remain firm. The BDI was down by 1.5 ...
Friday, 22 November 13
DRY BULK MARKET STILL LACKLUSTRE, DESPITE PROJECTIONS OF A NEW RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We might still be about six weeks far from the end of the year, but the projected by many analysts upcoming rally of the dry bulk market, hasn't ye ...
Friday, 22 November 13
US COAL PRODUCTION DOWN 1.3% W-W
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Thursday, 21 November 13
TAIPOWER TO PROCURE 750K MT OF 5500 GAR BITUMINOUS COAL FOR MAY - AUGUST 2014
COALspot.com: Taiwan Power Company intends to procure 750,000 metric tons of bituminous coal with calorific value not lesser than 5,500 kcal/kg on a ...
Thursday, 21 November 13
CAPESIZE : THE DOWNWARD TREND HAS TURNED INTO NOTABLE SPOT AND PERIOD IMPROVEMENT - FEARNLEYS
Handy
The Atlantic market experienced a general rate increase for most trades this week. More cargoes in the market and chrts looking for prompt t ...
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- Medco Energi Mining Internasional
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Parliament of New Zealand
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
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