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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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Tuesday, 29 November 16
US WEEKLY COAL OUTPUT TOTALS 17.2 MMST, UP 2.8% : EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17.2 million short ton ...
Monday, 28 November 16
BALTIC DRY INDEX FALLS TO 1181 POINT, DOWN 76 POINTS W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities down slightly and ending in a negative note this past wee ...
Thursday, 24 November 16
SUPRAMAX: SOUTH AFRICA STILL STRONG WITH OWNERS ACHIEVING AROUND USD 14-15K FOR TRIPS EAST - FEARNLEYS
Supramax
A positive kick-off in both the Atlantic and the Pacific. Very healthy rates within USG, some supras receiving well over 20k for trips t ...
Wednesday, 23 November 16
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
The Organization of the Petroleum Exporting Countries (OPEC) is due to finalize a reduction in total production at its next scheduled meeting in Vi ...
Tuesday, 22 November 16
ITALY'S STEAM COAL IMPORTS EXPECTED TO DECLINE 7% Y/Y TO 15 MILLION TONS IN 2017 - ITALIAN COAL ASSOCIATION
Italy’s steam coal imports expected to decline to 15 million tons in 2017, or 7% less imports compared to 2016. The coking coal imports are e ...
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- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- The University of Queensland
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- ASAPP Information Group - India
- Parliament of New Zealand
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
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