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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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Wednesday, 06 July 16
KOMIPO INVITES BIDS FOR 780000 MT OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
Wednesday, 06 July 16
MARKET INSIGHT - VASSILIS VASSILIOU
After a fairly silent first half of the year in the ship repair sector, we have finally a harmonized workload in the shipyards around the world. Ma ...
Tuesday, 05 July 16
DRY BULK SHIPPING'S RECOVERY NOT SEEN UNTIL 2018 - SGX
SGX freight derivative volumes totaled 36,542 contracts in June (-28% m/m; +52% y/y), while open interest averaged 121,189 contracts during the mon ...
Tuesday, 05 July 16
SPOT COAL INDEXES FOR INDONESIAN COAL CONTINUE TO HOLD FIRM - CS COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up by 0.83 percent week over week to averaging $39.98 per ton this past week, sh ...
Monday, 04 July 16
INDONESIA COAL PRICE REFERENCE CLIMBED 2.30% IN JULY
COALspot.com: The Indonesia Coal Benchmark Price increased in July 2016.
The Director General of Mineral and Coal of Indonesia, the r ...
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- Globalindo Alam Lestari - Indonesia
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- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
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- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
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- Directorate Of Revenue Intelligence - India
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- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
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- Energy Development Corp, Philippines
- India Bulls Power Limited - India
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- SMC Global Power, Philippines
- Indonesian Coal Mining Association
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- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
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- Economic Council, Georgia
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- European Bulk Services B.V. - Netherlands
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- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
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- IEA Clean Coal Centre - UK
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- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
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- Therma Luzon, Inc, Philippines
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- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
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- Mjunction Services Limited - India
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- Wilmar Investment Holdings
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- Bulk Trading Sa - Switzerland
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- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
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- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
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- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
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- Posco Energy - South Korea
- Videocon Industries ltd - India
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- Savvy Resources Ltd - HongKong
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- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
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- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
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- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
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- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
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- Minerals Council of Australia
- Anglo American - United Kingdom
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- GAC Shipping (India) Pvt Ltd
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- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
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- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
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- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
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- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- The University of Queensland
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
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- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Parliament of New Zealand
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- Trasteel International SA, Italy
- Thiess Contractors Indonesia
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- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
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- Australian Coal Association
- Medco Energi Mining Internasional
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- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
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- Billiton Holdings Pty Ltd - Australia
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- Chamber of Mines of South Africa
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