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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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Monday, 08 May 17
US WEEKLY COAL OUTPUT ON THE DOWN - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.8 million short tons ...
Thursday, 04 May 17
SUPRAMAX: INDO COAL ROUNDS LEVELS WITH DELIVERY CHINA IS TRADING AROUND LOW $6K, TRIP BACK TO CHINA
Supramax
The short week brought weaker rates across all routes. Supras from USG to Japan were fixed around $19-20 k daily and from ECSA to ECI $1 ...
Wednesday, 03 May 17
MALAYSIA SEEMS AS BIGGEST ADARO COAL IMPORTER IN Q1' 17
COALspot.com: In 1Q17, 30% of Adaro's sales went to Indonesia, the data from unaudited consolidated financial statement shows.
Malaysia ca ...
Wednesday, 03 May 17
MARKET INSIGHT - STELIOS KOLLINTZAS
The overall performance of each sector within the edible oil markets has remained poor for the past weeks. Apart from the veg oil exports fro ...
Tuesday, 02 May 17
THE FREIGHT MARKET CONTINUE TO SLUMP THIS PAST WEEK
COALspot.com: The Freight market continues to slump this past week, as all segments except Handy Size show a negative downward trend.
The Balt ...
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- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
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