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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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- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- MS Steel International - UAE
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- White Energy Company Limited
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- PTC India Limited - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
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