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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, 29 April 16
U.S. COAL IMPORTS IN Q4' 15 DECLINED TO 2.7 MMST FROM 3 MMST IN Q3' 15
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.3 million short tons (mm ...
Thursday, 28 April 16
PRICES OF POWER-STATION COAL IN INDONESIA IS INCREASING
COALspot.com: Inquiries for Indonesian 4200 - 4400 Kcal/kg GAR thermal coal cargoes from India suddenly increase recent days.
A Jakarta-based ...
Thursday, 28 April 16
KOMIPO TO IMPORT 710K MT OF BITUMINOUS COAL DURING JULY - SEPTEMBER 2016
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 710,000 Metric Tons of Bituminous Coal for its B ...
Thursday, 28 April 16
CAPE: BIT MORE OPTIMISM IN THE MARKET; SUPRAMAX: FORWARD CURVE IS FALLING - FEARNLEYS
Cape
A bit of a slower week. Activity level has dropped, though the rates do still remain firm, says Fearnleys in its latest weekly report.
...
Wednesday, 27 April 16
THE OCEAN SHIPPING EXPERIENCED DRAMATIC VOLATILITY IN THE BEGINNING OF 2016 - PANOS TSILINGIRIS
Shipping’s new (ab)normal
The global economy and ocean shipping experienced dramatic volatility in the beginning of 2016 and as the glob ...
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- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
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