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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, 20 September 13
DRY BULK MARKET REACHES NEW HEIGHTS THIS WEEK STANDING AT THREE-YEAR HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The biggest rally of the dry bulk market in more than three years have brought back joy among ship owners, especially those active in the Capesize m ...
Friday, 20 September 13
US COAL PRODUCTION SLIGHTLY UP WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer produced totalled approximately 20.30 million short tons (mmst) of ...
Friday, 20 September 13
COLOMBIA SHIPPED 31.14 MILLION TONS OF THERMAL COAL IN H1
COALspot.com : Colombia’s coal exports fell by 20.59 percent in June 2013 compared to Colombia’s May's export of 7,633,579 MT.
Colom ...
Thursday, 19 September 13
CAPESIZE : AVERAGE DAILY EARNINGS HAVE GAINED ALMOST USD 6K WOW - FEARNLEYS
Handy
The rates in Feast are still firm this week even the activity calmed down a bit as chrtrs are not in a rush to cover even their end Sept carg ...
Wednesday, 18 September 13
IRON ORE AND ZINC ARE BEST PERFORMING MINING SECTORS IN CURRENT LOW PRICE, HIGH COST ENVIRONMENT - WOOD MACKENZIE
With the fall in commodity prices, cash margins in the mining industry have come under pressure. Accordingly, producers and investors are placing in ...
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- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- The University of Queensland
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- MS Steel International - UAE
- Agrawal Coal Company - India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
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