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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, 04 January 19
FOCUS IS ON BOOSTING COAL PRODUCTION: INDIAN COAL MINISTER
The current focus of the government is on boosting production from operational coal mines, according to Minister for Coal, Piyush Goyal.
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Thursday, 03 January 19
CAPESIZE: A MORE POSITIVE START OF THE NEW YEAR THAN EXPECTED FOR THE BIG SHIPS - FEARNLEYS
Capesize
A more positive start of the new year than expected for the big ships, with average gains of US$ 500/day posted on the first tra ...
Tuesday, 01 January 19
INDONESIA: COAL PRODUCTION EXPECTED TO EXCEED THIS YEAR'S TARGET - JP
Indonesian coal production reached 456 million tons up to Thursday or 94.02 percent of this year’s total target of 485 million tons, accordin ...
Monday, 31 December 18
THE INDONESIAN COAL MARKET Q1 '19 FORECAST: LOOKS DIRECTIONLESS - TRADER
The Indonesian coal market looks directionless, an International coal trader said when we asked him to give his forecast for 1Q' 2019.
...
Monday, 31 December 18
GLOBAL COAL DEMAND GREW BY 1% IN 2017; GLOBAL COAL POWER GENERATION INCREASED BY OVER 250 TWH - IEA
After two years of decline, global coal demand grew by 1% in 2017 to 7585 Mt as stronger global economic growth increased both industrial output an ...
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- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- White Energy Company Limited
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- PTC India Limited - India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
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