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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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Sunday, 08 September 13
BALTIC INDEX UP ON HIGHER CAPESIZE, PANAMAX RATES
COALspot.com : The freight market continued saw one of the biggest rally last week with Cape Size taking the lead followed by Panamax.
The BDI wa ...
Friday, 06 September 13
DRY BULK MARKET REACHES NEW YEAR-HIGHS ON THE BACK OF INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been on the rise once again, but this time around any new increase of freight rates translates into new year-highs, thus bri ...
Friday, 06 September 13
US PRODUCED APPROXIMATELY 90.80 MMST OF COAL IN AUGUST
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.90 million short tons (mmst) of ...
Thursday, 05 September 13
INDONESIAN COAL EXPORTS UP BY 6.72 PERCENT IN JULY
COALspot.com: Indonesia, the world's largest multi grade coal exporter shipped 35.268* million tons of coal in July 2013. Indonesian coal exp ...
Thursday, 05 September 13
HANDY: NICKEL ORE WAS PUSHING THE FAR EAST MARKET - FEARNLEYS
Handy
Nickel Ore was pushing the Feast market, several ships were fixed from low teens to $14k. Indo/India was still supported by bauxite, while th ...
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- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Australian Coal Association
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
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