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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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- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Planning Commission, India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
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