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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, 06 April 18
TOP MINER BHP QUITS WORLD COAL ASSOCIATION OVER CLIMATE CLASH - BLOOMBERG
BHP Billiton Ltd. has severed ties with the World Coal Association over a clash of views on how to combat climate change, with the mining giant say ...
Thursday, 05 April 18
INDONESIA TO POSTPONE NEW COAL, PALM OIL SHIPPING RULES TO 2020 - REUTERS
Indonesia will delay until 2020 trade rules requiring exporters of coal and crude palm oil to use only Indonesian-flagged vessels, government offic ...
Tuesday, 03 April 18
MARKET ANALYSIS - GEORGE LAZARIDIS
In the midst of a relatively quiet week for markets, with disruptions being caused by the Christian holidays, it seems as though we find ourselves ...
Monday, 02 April 18
THE FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT, SAYS VISTAAR
The freight market softening to continue. Thursday, March 29, 2018, the Baltic Dry Index decreased by 42 points, reaching 1080 points.
T ...
Monday, 02 April 18
THIESS TO DELIVER $150M SENAKIN CONTRACT EXTENSION
Thiess has secured a $150 million contract extension to provide mine services at Arutmin’s Senakin coal mine in South Kalimantan, Indonesia.
...
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- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
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