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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, 09 June 13
IRON ORE DEMAND: WEAK; COAL MOVEMENT: STEADY TO INDIA AND CHINA - CAPT. REDDY
COALspot.com - The freight market was fairly steady with BDI up by 0.37 per cent closed at 812 points this week.
The Cape index was also ended in ...
Friday, 07 June 13
MEDITERRANEAN COAL MARKETS
Press Release: 3rd International Conference Mediterranean Coal Markets will be held on 16-17th of September 2013, Istanbul, Turkey, Ceylan Intercont ...
Friday, 07 June 13
US'S COAL PRODUCTION INCREASED BY 0.54 PER CENT THE WEEK ENDED JUNE 1
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.60 million short tons (mmst) of ...
Thursday, 06 June 13
WE ARE SEEING SOME FRESH INDO COAL TO CHINA AND INDIA - FEARNRESEARCH
Handy
In the Atlantic, the Gulf remains firm for the next week with a few orders in the market. The Supramaxes are seeing around low 20k for fronth ...
Wednesday, 05 June 13
DON'T AVOID PAYING COAL ROYALTY TO THE GOVERNMENT - INDONESIAN ENERGY MINISTER
COALspot.com – “Every country has the right to make policies to protect their national interests”, Energy and Mineral Resources Mi ...
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- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- The University of Queensland
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
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