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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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Thursday, 14 July 16
SHIPPING'S HALF YEAR REPORT - 'MUST DO BETTER' - CLARKSONS
It’s the time of year, with the school holidays and end of term approaching, that many pupils will nervously take home their school reports t ...
Wednesday, 13 July 16
EIA FORECASTS U.S. COAL EXPORTS TO DECLINE BY 15 MMST IN 2016 AND BY 4 MMST IN 2017
COALspot.com: U.S. coal production in June was 57 million short tons (MMst), a 6 MMst (13%) increase from May and 9 MMst (14%) lower than in June 2 ...
Wednesday, 13 July 16
2015 VS. 2016; THE DRY BULK DEMOLITION DERBY - JOHN N. COTZIAS
In the first half of the year 373 Bulkers and General Cargo ships were scrapped representing 23.8mil tons of dwt carrying capacity.
Comparing ...
Tuesday, 12 July 16
DUE TO LONG HOLIDAYS, CS COAL INDICES HELD AT THE SAME LEVEL OF THE PREVIOUS WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin was flat week over week to averaging $39.98 per ton this past week.
Due to the ...
Monday, 11 July 16
COAL MARKETS SAW IMPROVED PRICES IN H1 2016 - SGX'S COMMODITIES MID-YEAR REFLECTION
COALspot.com: Coal
Coal markets saw improved prices in H1 2016 with the benchmark coking coal and thermal coal spot prices rising 18% and 25%, re ...
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- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Planning Commission, India
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
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