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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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Monday, 24 August 15
IS CHINA'S STEEL EXPORTS ENOUGH TO SUPPORT THE FREIGHT MARKET? - BIMCO
No, it’s not enough, you will need lower Chinese iron ore production too in order to keep growing imports of iron ore into China that will su ...
Sunday, 23 August 15
SHIPPING FREIGHT RATES FALL SHARPLY ON EXCESS SUPPLY AND LOW DEMAND
COALspot.com: The BDI continued to soften and was down 5.78 pct and falls back below 1000 points this week.
The cape Index lost 17.25 per cent ...
Friday, 21 August 15
U.S. YEAR-TO-DATE COAL PRODUCTION VOLUME FALLS 8.7% Y-O-Y
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.3 million shor ...
Friday, 21 August 15
GLOBALCOAL TO LAUNCH ONLINE TRADING OF PHYSICAL MET COAL ON 13 OCTOBER
On 13 October 2015, globalCOAL will launch an online platform for the physical procurement and trade of high quality hard coking coal delivered FOB ...
Thursday, 20 August 15
COAL PRICES FALL TO 12-YEAR LOWS AS CHINA, INDIA JOIN DEMAND SLOWDOWN - REUTERS
Coal futures have fallen to 12-year lows, hit by soaring production and a slowdown in global buying, including from India and China which until rec ...
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- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Planning Commission, India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
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