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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, 19 February 16
INDONESIAN HBA HITS A NEW LOWS BELOW $51 A TON AS OVERSUPPLY, LOW DEMAND WOES PERSIST
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further deep in February 2016. HBA has slumped second time t ...
Friday, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
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- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
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