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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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Thursday, 18 May 17
SOUTHEAST ASIA CAN ACCELERATE ACHIEVEMENT OF PARIS AGREEMENT GOALS - WCA
Low emissions coal in Asia reduces more CO2 emissions than renewable investment in Western Europe.
Investing in low emissions coal plants in S ...
Wednesday, 17 May 17
THE CHINESE IMPORTS ARE A BAROMETER FOR VESSEL UTILIZATION - INTERMODAL
According to economic data, China imports increased year-on-year 38% in February, 20% in March – which is approximately US$160-170b - w ...
Monday, 15 May 17
THE PORT OF NEWCASTLE HAS SHIPPED 0.99 PERCENT LESS COAL IN APRIL 2017
COALspot.com: The Port of Newcastle, Australia’s major trading ports, and the world’s largest coal export ports has shipped $AU 1,636.2 ...
Monday, 15 May 17
THE CAPESIZE INDEX ROSE SIGNIFICANTLY THIS PAST WEEK COMPARED TO PREVIOUS WEEK
COALspot.com: The Freight market slightly up this past week, as BDI and Cape shows a positive trend week over week.
The Baltic Exchange, track ...
Friday, 12 May 17
U.S. COAL PRODUCTION DOWN AGAIN WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.3 million short tons ...
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- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
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- Parliament of New Zealand
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- Anglo American - United Kingdom
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- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Planning Commission, India
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Sojitz Corporation - Japan
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- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
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- Metalloyd Limited - United Kingdom
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- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
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- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
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- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
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- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
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- Australian Commodity Traders Exchange
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- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
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- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Posco Energy - South Korea
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
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- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
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- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
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- White Energy Company Limited
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- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
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- Jaiprakash Power Ventures ltd
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
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- Independent Power Producers Association of India
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- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
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- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
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