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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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Tuesday, 23 January 18
OIL MARKET ANALYSIS - ALLIED
Brent oil futures hit a three year high on January 16th touching around USD 70.30 before falling back down to around USD 68.60 at the Time of this ...
Friday, 19 January 18
U.S. WEEKLY COAL OUTPUT WAS 13.5 MMST FOR THE WEEK ENDING JANUARY 13, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.5 million short tons ...
Thursday, 18 January 18
WORLD TRADE IN HARD COAL RISES BY 1.5% IN 2017 - KOHLENIMPORTEURE
Press Release: World Trade in Hard Coal Rises by 1.5% in 2017. German Steam Coal Imports Plummet by 15% in 2017 – in Contrast to Other Sector ...
Wednesday, 17 January 18
SHIPPING MARKET INSIGHT - INTERMODAL
As we are now well into the first month of 2018, the mood across the entire offshore industry undeniably remains rather positive following the oil ...
Monday, 15 January 18
THE FREIGHT RATES ARE EXPECTED TO BE FLAT TO WEAK THIS WEEK - VISTAAR
COALspot.com: The daily average earnings for Supramax, for the route Indonesia to India passing through Singapore has stayed firm, week over week, ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- ASAPP Information Group - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
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