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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, 24 July 19
COAL'S DEMISE QUICKENS IN EUROPE AS MARKET SHIFT IDLES PLANTS - BLOOMBERG
Commodity markets are stripping away the case for coal in Europe, moving quicker than government efforts to close the most polluting power plants.
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Monday, 22 July 19
SUPRAMAX: THE ASIAN ARENA SAW INCREASED ACTIVITY AND STRONGER NUMBERS BEING CONCLUDED; INDONESIAN ROUNDS REMAINED FIRM - BALTIC BRIEFING
Capesize
Another week of gains as the Atlantic basin continues to be pressurised on tonnage and Brazilian cargoes keep up a steady flow. The Ca ...
Thursday, 18 July 19
WORLD TRADE IN HARD COAL ROSE BY 4.7% IN 2018 - GERMANY COAL IMPORTERS ASSOCIATION
World Trade in Hard Coal Rose by 4.7% in 2018
Hard Coal Can Prevent Stress in the Electric Power System in Germany
• Sharp decl ...
Wednesday, 17 July 19
MARKET INSIGHT - INTERMODAL
The Strait of Hormuz is one of the most important waterways in the world, connecting crude producers in the Middle East with key markets in the res ...
Tuesday, 16 July 19
KING COAL RULES IN JAPAN AS POWER UTILITIES IN THRALL TO LOW-COST FUEL - REUTERS
Japanese utilities will rely on the return of coal-fired power plants from maintenance to meet peak electricity demand this summer, highlighting th ...
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- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
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