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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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Sunday, 04 December 16
U.S. WEEKLY COAL OUTPUT DECLINED 11.9% W/E 26 NOV; UP 1.4% Y/Y, EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.2 million short ton ...
Thursday, 01 December 16
OIL PRICES MAY SEE LITTLE GROWTH BEFORE 2018, FITCH RATINGS SAYS
High inventories and the potential for US shale production to respond quickly to any market tightening mean oil prices may flat line in 2017 before ...
Thursday, 01 December 16
CHINA 2017 OIL, GAS OUTPUT DROP MAY WORSEN ON CAPEX CUT: FITCH
China's oil and gas production may shrink even more in 2017 than in 2016 after the country's leading oil companies cut exploration and prod ...
Thursday, 01 December 16
ANOTHER WONDERFUL WEEK FOR PANAMAX - FEARNLEY
Supramax
A slower start to the week in the Pacific compared to last Trips from N. China to S. China is paying in the range of low USD 5k, while I ...
Tuesday, 29 November 16
AUSTRALIA'S PORT OF NEWCASTLE SHIPPED 13.08 MT OF COAL IN OCTOBER; DOWN 10.39% M/M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU1,124.7 Mi ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Minerals Council of Australia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- The University of Queensland
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Australian Coal Association
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
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