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