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