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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, 12 December 16
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO BE SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this past week and ending on a negative note week ...
Thursday, 08 December 16
STABLE OUTLOOK FOR GLOBAL MINING IN 2017 : FITCH
Fitch Ratings' sector and rating outlooks for the global mining industry in 2017 are both stable, reflecting Fitch's view that prices have ...
Thursday, 08 December 16
CHINESE COAL DEMAND WOULD BE THE KEY FACTOR THAT INFLUENCE WORLD COAL PRICES IN 2017, POLL
“WHAT ARE THE KEY FACTORS THAT MAY INFLUENCE WORLD'S COAL PRICES IN 2017?”
The on-line opinion poll conducted by COALspot.com ...
Thursday, 08 December 16
PANAMAX: THE FIRM TENDENCY CONTINUES IN BOTH HEMISPHERES - FEARNLEY
Supramax
Market remained firm - true mostly within Atlantic.
Star performer USG remained its title, where Supras reached around USD 21k ...
Wednesday, 07 December 16
SHIPPING MARKET INSIGHT - THEODOROS NTALAKOS
Looking back at my previous end-of-year insights, for the last seven years, in each and every one of them, I begin with something like “there ...
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- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Planning Commission, India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Aditya Birla Group - India
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
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