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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, 10 January 16
LNG BUNKERING IN ASIA: FUELING A PROMISING FUTURE? - REED SMITH
The requirement of a mandatory reduction of sulphur content in bunker fuel proposed by the International Maritime Organisation (IMO) poses a challe ...
Saturday, 09 January 16
BALTIC DRY INDEX SINKS 10% WEEK OVER WEEK TO AN ALL-TIME LOW OF 429 POINTS
COALspot.com: The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, decline around 10% we ...
Friday, 08 January 16
FOB INDONESIA COAL SWAP FOR DELIVERY H1'16 REMAIN FLAT AS DEMAND DROPS OFF
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month, flat week over week. The price for coal has been in a Dull Market sinc ...
Friday, 08 January 16
FOB RICHARDS BAY COAL SWAP FOR Q2'16 DELIVERY CLOSED UP $0.13 AT $45.50 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Friday, 08 January 16
WEEKLY US COAL PRODUCTION DECLINES 1.6% TO 11.7 MMST, SAYS EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.7million short ...
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- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
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