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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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Friday, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
Thursday, 05 May 16
DRY BULK MARKET ON REVERSE MODE, AS HOLIDAYS AROUND THE WORLD HURT DEMAND - HELLENIC SHIPPING NEWS
The dry bulk market’s recent rally has been put on a temporary hold, as various holidays around the world have put a stop in it. In its lates ...
Wednesday, 04 May 16
COAL IMPORTS: A VOLATILE MATTER OR STILL POWERING DOWN? - CLARKSONS
Chinese coal imports decreased significantly in 2014-15, and so far in 2016 the pace of decline appears to have slowed, with imports even recording ...
Wednesday, 04 May 16
IS THE DRY BULK MARKET OUT OF THE WOODS YET, OR NOT? - HELLENIC SHIPPING NEWS
Things are beginning to brighten up in the beleaguered dry bulk market, which is riding on a multi-week rally to find itself around the “psyc ...
Wednesday, 04 May 16
POWER - WEEK: REAL EXAMPLES AND CASE STUDIES
POWER WEEK
7 - 11 November 2016, PARKROYAL on Beach Road Hotel, Singapore
www.power-week.com
Overview
Designed for the global e ...
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- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Australian Coal Association
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Economic Council, Georgia
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Planning Commission, India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
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