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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, 20 January 19
OIL MARKET REPORT: A MARATHON, NOT A SPRINT - IEA
Last month, we asked if there was a floor under prices following the signing of a new Vienna Agreement that aims to re-balance the oil market. Foll ...
Thursday, 17 January 19
EIA ESTIMATES THAT U.S. COAL EXPORTS WERE 116 MMST IN 2018, 20% HIGHER THAN THE AMOUNT EXPORTED IN 2017
Coal Supply
EIA estimates that coal production declined by 20 million short tons (MMst) (3%) in 2018, despite a 19 MMst increase in U.S. coal e ...
Thursday, 17 January 19
U.S COAL OUTPUT IS EXPECTED TO FALL BY 3 PER CENT IN 2019 - EIA
EIA forecasts that U.S. coal production will total 729 million short tons (MMst) in 2019, down by 25 MMst (3%) from 2018.
Acco ...
Wednesday, 16 January 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we go through the first days of the year and just a few weeks before the Chinese New Year, the ship repair sector is witnessing a big difference ...
Monday, 14 January 19
KOREA SOUTHERN POWER INVITES BIDS FOR 320,000 MT OF MIN 3,800 NCV COAL
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 3,800 kcal/kg NCV coal for ...
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- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
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