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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, 15 August 16
THE SPOT FREIGHT MARKET STRENGTHEN OVER THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose as Cape and Panamax segments ending in a positive no ...
Friday, 12 August 16
U.S. WEEKLY COAL OUTPUT ENDING AUGUST 6 FELL SLIGHTLY
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.9 million short ton ...
Thursday, 11 August 16
CAPESIZE THE PACIFIC SIDE IS LOOKING MORE POSITIVE, DRIVEN BY AUSTRALIAN IRON ORE - FEARNLEYS
Supramax
Rates continue to be under pressure with index ending up with 639 points and average TC value at USD6,680, said Fearnleys. Fearnleys A/S ...
Thursday, 11 August 16
EIA ESTIMATES THE DELIVERED COAL PRICE TO U.S. ELECTRIC UTILITIES IN 2017 AVERAGED $2.24/MMBTU; $0.05/MMBTU HIGHER THAN 2016 ESTIMATES
Coal Supply
U.S. coal production in July was 65 million short tons (MMst), an 8 MMst (14%) increase from the previous month but 11 MMst (15%) low ...
Wednesday, 10 August 16
THE DRY BULK MARKET KEPT SOFTENING LAST WEEK; WE CAN SEE MUCH HEALTHIER NUMBERS STARTING SEPTEMBER
The Dry Bulk market kept softening last week as we have now started going through the traditionally quieter days of the summer season peak period, ...
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- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
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- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
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- Australian Commodity Traders Exchange
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- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Australian Coal Association
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
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