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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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Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
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- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- The University of Queensland
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
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