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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, 02 June 17
U.S THE PAST WEEK'S COAL PRODUCTION ESTIMATE UP 4.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15 million short tonnes ...
Wednesday, 31 May 17
MARKET INSIGHT - KONSTANTINOS KAKAVITSAS
In the next episode of the oil market; The market reacts to OPEC’s production cut extension, the US shale oil producers are ruining the carte ...
Tuesday, 30 May 17
MARKET ANALYSIS - GEORGE LAZARIDIS
Despite the fair performance that has been noted in the Chinese economy over the past 5 months, we have started to see an increase in the skepticis ...
Friday, 26 May 17
MOST COAL PLANTS IN THE UNITED STATES WERE BUILT BEFORE 1990 - EIA
Coal-fired electricity generators accounted for 25% of operating electricity generating capacity in the United States and generated about 30% of U. ...
Friday, 26 May 17
U.S WEEKLY COAL OUTPUT ESTIMATE UP 6.3% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 14.3 million short ton ...
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- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Central Java Power - Indonesia
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Australian Coal Association
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
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