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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, 10 August 18
U.S. COAL PRODUCTION TO DECLINE BY 1.8% IN 2019 BECAUSE COAL EXPORTS AND COAL CONSUMPTION ARE BOTH FORECAST TO DECREASE - EIA
EIA forecasts U.S. coal production will decline by 1.1% to 766 million short tons (MMst) in 2018 despite a 5.7% (6 MMst) increase in coal exports.
...
Thursday, 09 August 18
RIO TINTO COMPLETES SALE OF REMAINING COAL ASSETS
Rio Tinto has completed the sale of its remaining coal assets in Queensland, Australia, for $3.95 billion.
According to a noted post ...
Wednesday, 08 August 18
CHINA DEMANDS PREMIUM IRON ORE, COAL; MINERS MIXED IMPACT - FITCH RATINGS
China’s stricter environmental regulations and structural changes in its steelmaking industry boosts ongoing demand for high-quality iron ore ...
Wednesday, 08 August 18
SHIPPING MARKET INSIGHT - CHRISTOPHER WHITTY
Singapore's shipyard business has evolved over the decades, from shipbuilding and repairs to rig building. It's now evolving again, to cate ...
Friday, 03 August 18
PHEW! ASIA, EUROPE HEATWAVE PUSHES AUSTRALIA COAL PRICES TO 6-YEAR HIGH: REUTERS
Australian thermal coal prices have hit fresh six-year highs as a heatwave across the northern hemisphere has triggered a spike in demand for coal- ...
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- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- The University of Queensland
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Aditya Birla Group - India
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