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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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- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- The University of Queensland
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Marubeni Corporation - India
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