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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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- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
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