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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, 14 June 13
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.20 MILLION SHORT TONS W/E 8 JUNE 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.20 million short tons (mmst) of ...
Thursday, 13 June 13
HANDY: SHORT PERIOD WERE FIXED AT AROUND USD 9000 LEVEL
Handy
Despite falling rates for bigger sizes, the Supras in Atlantic are seeing some improvements with fresh biz. US Gulf positions fetching tick a ...
Thursday, 13 June 13
BIMCO EXPECTS SUBDUED CAPESIZE EARNINGS FOR THE COMING WEEKS - HELLENIC SHIPPING NEWS
Bulk is not only about China even though it is a key driver. In this section, we have taken a closer look at the European seaborne coal markets, whi ...
Thursday, 13 June 13
RIO TINTO AGREES SALE OF EAGLE PROJECT FOR AN ESTIMATED US$325 MILLION IN CASH
COALspot.com - Rio Tinto has reached a binding agreement to sell its Eagle project to Lundin Mining Corporation for an estimated US$325 million in c ...
Thursday, 13 June 13
HARD COAL IMPORTS RISE SHARPLY IN GERMANY IN Q1 2013 - COAL IMPORTERS ASSOCIATION
Coal-fired Power Plants in Germany: Pillars of the Grid and the Energy Turnaround; Hard Coal Consumption and Hard Coal Imports Rise Sharply in Germa ...
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- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
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