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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, 30 January 17
DUE TO LUNAR YEAR HOLIDAYS, THE FREIGHT MARKET STAYED WEAK
COALspot.com: Due to Lunar year holidays and celebration, the Freight market was down in all segments this past week.
The Baltic Exchange, tra ...
Friday, 27 January 17
U.S WEEKLY COAL OUTPUT RISES FOR THIRD STRAIGHT WEEK
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Wednesday, 25 January 17
MARKET INSIGHT - KONSTANTINOS KAKAVITSAS
Remember that old but classic song called “Destination Unknown”? Well that is where the oil market is heading right now. The song made ...
Tuesday, 24 January 17
MARKET UPDATE - ALLIED
This week at the World Economic Forum in the Swiss resort of Davos we had a historic first via the attendance and speech given by China’s pre ...
Monday, 23 January 17
THE PORT OF NEWCASTLE SHIPPED $AU 15.279 BILLION WORTH OF 161.399 MILLION TONS OF COAL IN 2016
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU 1,453.1 M ...
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- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
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