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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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Wednesday, 13 December 17
REFINED COAL HAS MADE UP NEARLY ONE-FIFTH OF COAL-FIRED POWER GENERATION SO FAR IN 2017 - EIA
The U.S. power sector consumption of coal is increasingly shifting to refined coal, even as coal-fired electricity generation decreases. Use of ref ...
Wednesday, 13 December 17
DEMAND FOR THERMAL COAL LOOKED RELATIVELY ROBUST - DANIEL HYNES
Coal prices were a touch higher. Demand for thermal coal looked relatively robust, after reports continued to surface that Chinese authorities have ...
Wednesday, 13 December 17
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
As another year is coming to an end and much has been already written about the positive reversal in the dry bulk market, we think it is interestin ...
Monday, 11 December 17
INDIA CONSUMERS ARE SAID TO BE DESPERATELY SEEKING CARGOES - DANIEL HYNES
Coal markets were stronger, as strong demand outside China continues to spur buying said Daniel Hynes, Senior Commodity Strategist at ANZ.
Acc ...
Monday, 11 December 17
CAPESIZE FFA MARKET LOOKING PROMISING MOVING FORWARD - FIS
Capesize
Another very promising day for the big ships as rates continued to firm in both oceans and the paper market ate into the backwardation s ...
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- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- The University of Queensland
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Minerals Council of Australia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Aditya Birla Group - India
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
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