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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, 18 October 13
WOOD MACKENZIE FORECASTS CHINA WILL OUTWEIGH THE REST OF THE WORLD FOR BASE METALS DEMAND BY 2017
China set to account for 52% of 117mt base metals market by 2017
China is on track to exceed rest of the World demand by 2017, becoming the singl ...
Friday, 18 October 13
DRY BULK MARKET ON "PAUSE" MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been on "pause" mode over the past week, after China's return from the week long holidays. The industry's benchm ...
Friday, 18 October 13
US PRODUCED 6.7% MORE COAL W-W
COALspot.com – United States the world’s second largest coal producer produced approximately 18.9 million short tons (mmst) of coal in a ...
Thursday, 17 October 13
CAPESIZE: RATES ARE AGAIN MOVING UPWARDS - FEARNRESEARCH
Handy
Activities were obviously slowed down in the Pacific basin. There were only few coal movements which fixed around USD 15-16k for ships in Sin ...
Thursday, 17 October 13
SGX TO LAUNCH "SGX THERMAL COAL FUTURES" NEXT MONDAY
COALspot.com: SGX is to launch two thermal coal futures contracts, SGX API 8 CFR China Coal Index Futures and SGX IHS McCloskey Indonesian Sub-bit F ...
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- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Australian Coal Association
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
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