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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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Monday, 28 May 18
KOMIPO ISSUED ANOTHER TENDER FOR 130K MT OF 5700 NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 130,000 mt of min. 5700 NAR coal of Australian origi ...
Thursday, 24 May 18
SUPRAS FIXING AROUND USD 15000 FOR INDO TO CHINA COAL TRIPS - FEARNLEYS
Capesize
Both the physical and the paper market have dropped sharply the last couple of days on the back of a lack of fresh cargoes and a growing ...
Thursday, 24 May 18
FITCH: FALLING COAL INVESTMENT TO SUPPORT ASIAN PRICES
Press Release: The long-term outlook for the Asian thermal coal prices is improving, amid rising regional demand and falling mining investment, whi ...
Thursday, 24 May 18
BEIJING ORDERS UTILITIES, MINERS TO HELP COOL RED-HOT COAL MARKET: SOURCES - REUTERS
China’s state planner ordered utilities this week to stop stockpiling thermal coal and told miners to slash prices, two sources familiar with ...
Wednesday, 23 May 18
TANKER MARKET INSIGHT - TIMOS PAPADIMITRIOU
In the last six months we have seen more than 110 reported tanker transactions involving tonnage larger than 32k dwt and younger than 18 years old. ...
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- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
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