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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, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- McConnell Dowell - Australia
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- The University of Queensland
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- The Treasury - Australian Government
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Planning Commission, India
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
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