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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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Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
Friday, 22 January 16
WEEKLY US COAL PRODUCTION ESTIMATES ALMOST FLAT
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.3 million shor ...
Friday, 22 January 16
COAL PRICES TO REMAIN UNDER PRESSURE THIS YEAR
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week. The falling trend of prices for coal was continuing ...
Friday, 22 January 16
Q3' 16 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 40.80; DECLINE $ 2.80 M-O-M
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and decline week over week.
The Q1’ 2016 FOB Richards B ...
Wednesday, 20 January 16
Q3'16 FOB NEWCASTLE COAL SWAP CLOSED $ 2.40 LESSER THAN Q1'16 CLOSING PRICE OF $ 38.10
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $0.77 per ton (2.06%) this past week compared to the sam ...
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- SMG Consultants - Indonesia
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- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
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- Mercuria Energy - Indonesia
- Economic Council, Georgia
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- Goldman Sachs - Singapore
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- Parliament of New Zealand
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- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
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- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
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- Thiess Contractors Indonesia
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- Sojitz Corporation - Japan
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- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
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- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
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- Power Finance Corporation Ltd., India
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- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
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- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
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- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
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- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
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- Independent Power Producers Association of India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
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- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
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