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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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Wednesday, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
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- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
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