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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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- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- PTC India Limited - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- The University of Queensland
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
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