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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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Wednesday, 07 December 16
U.S. COAL PRODUCTION IS FORECAST TO INCREASE BY 2% IN 2017 - EIA
U.S. Coal production in November 2016 was 70.7 million short tons (MMst), the third time this year monthly production exceeded 70 MMst, says EIA.
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Wednesday, 07 December 16
IT'S BEEN YET ANOTHER TURBULENT COUPLE OF DAYS..... - GEORGE LAZARIDIS
It’s been yet another turbulent couple of days, with a significant number of news headlines shaking up markets.
On Friday we had & ...
Monday, 05 December 16
INDIAN HYDROPOWER PRODUCTION AT LOWEST LEVEL SINCE 2012, SAYS COMMODORE RESEARCH
According to Commodore Research, the first eleven months of this year have seen India’s overall electricity production total approximately 1. ...
Monday, 05 December 16
THE DECEMBER 2016 HBA HITS TO ITS HIGHEST LEVEL SINCE MAY 2012
COALspot.com: The Indonesia coal benchmark price hits to its highest level since May 2012. The government declared benchmark prices for Indo ...
Monday, 05 December 16
BALTIC PANAMAX INDEX UP 5.98%; BALTIC CAPE INDEX FELL 2.52% W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rally slightly continues this past week and ending on a s ...
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- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Mintek Dendrill Indonesia
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