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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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Saturday, 10 August 13
MOODY'S: OUTLOOK FOR US COAL INDUSTRY CHANGES TO STABLE FROM NEGATIVE
Moody's Investors Service has changed its outlook for the US coal industry to stable from negative, the rating agency says in a new report, "U ...
Saturday, 10 August 13
DEMOLITION ACTIVITY TO BE CRUCIAL AGAIN IN PROVIDING SUPPORT TO THE DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We appear to have forgotten demolition activity this year, with the Baltic Dry Index gaining traction in the latter part of the second half and emer ...
Friday, 09 August 13
US PRODUCED 4.00 PERCENT LESS COAL ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.00 million short tons (mmst) of ...
Thursday, 08 August 13
HANDY : NO POSITIVE SENTIMENT FOR THE FAR EAST MARKET - FEARNRESEARCH
Handy
No positive sentiment for the Far East market. There are a number of ships coming open in SE Asia this week and owners rating mid/high USD 8k ...
Thursday, 08 August 13
MALAYSIA HOSTS THIRD ANNUAL ASIAN SUB-BITUMINOUS COAL USERS' GROUP CONFERENCE
Press Release : The third Annual Asian Sub-Bituminous Coal Users’ Group (ASBCUG) conference convenes Sept. 30-Oct. 3 at the Eastern & Orie ...
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- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Planning Commission, India
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
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