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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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Wednesday, 20 November 13
PANAMAX MARKET RESUMED ITS NEGATIVE MOVEMENT FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The recovery noted the week prior in the dry Bulk market proved to be short-lived, as the BDI slipped back down to the low 1,500 point ...
Wednesday, 20 November 13
TAIPOWER TO IMPORT 0.825 MMT OF 5000 GAR COAL FOR Q2' 14
COALspot.com: Taiwan Power Company intends to procure 825,000 metric tons of general sub-bituminous coal with calorific value not lesser than 5,000 ...
Wednesday, 20 November 13
CAPES AND PANAMAXES SOFTENING; SMALLER SIZE SEGMENTS FIRMING FURTHER - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable- )
The BDI has closed off the week on the red, with rates for Capes and Panamaxes softening and those fo ...
Tuesday, 19 November 13
INDONESIAN GOVERNMENT'S DECLARED COAL PRICE REFERENCE UP 1.98% IN NOVEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.52 / MT ...
Tuesday, 19 November 13
WEEKLY COAL EXPORTS FROM NEWCASTLE PORT INCREASED BY 20.59%
COALspot.com: In the week ended November 18, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.92& ...
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- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- The University of Queensland
- PTC India Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Planning Commission, India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
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