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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, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
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- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- The University of Queensland
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
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