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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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- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Latin American Coal - Colombia
- The University of Queensland
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
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