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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, 03 August 18
HBA HAS RISEN 28.41 PER CENT IN A YEAR TO BE AT THEIR HIGHEST LEVELS SINCE JANUARY 2012
COALspot.com: The benchmark price of Indonesian thermal coal has risen 28.41 per cent in a year to be at their highest levels since January 2012.&n ...
Thursday, 02 August 18
INDO / CHINA COAL RV'S IS PAYING AROUND USD 11,000 TO SUPRAS BSS DELIVERY SINGAPORE - FEARNLEYS
Capesize
The counter seasonally strong market during the summer months bodes well for the remainder of the year.
According ...
Wednesday, 01 August 18
JOKOWI CANCELS PLAN TO REVOKE COAL DMO - JP
President Joko "Jokowi" Widodo on Tuesday has canceled the government’s plan to revoke the domestic market obligation (DMO) for coa ...
Wednesday, 01 August 18
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
The dry bulk market activity over the past four weeks has remained stable when compared to the previous months. There are concerns with regards to ...
Tuesday, 31 July 18
INDONESIA UNLIKELY TO CHANGE COAL SUPPLY, PRICING RULES UNTIL 2019 - REUTERS
Indonesia is unlikely to change its rules on domestic coal supply and pricing until 2019, Coordinating Maritime Minister Luhut Pandjaitan said on M ...
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- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- The University of Queensland
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