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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, 03 July 15
U.S DELIVERS WEAK FIRST HALF COAL PRODUCTION; 8.8% LOWER Y-O-Y
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 15.5 million short ...
Friday, 03 July 15
SHIPPING CONFIDENCE EQUALS SEVEN-YEAR LOW - MOORE STEPHENS
Overall confidence levels in the shipping industry fell during the three months to May 2015 to a level equal to the lowest rating recorded in the p ...
Thursday, 02 July 15
TECHNOLOGY AND INNOVATION IN MINING 2015 - IXG
Information Exchange Group’s Technology and Innovation in Mining 2015- International Summit on Mining
Press Release: The inaugural editi ...
Thursday, 02 July 15
THE PERFORMANCE OF THE CAPESIZE SEGMENT PUSHED DRY BULK MARKET TO UPWARD LAST WEEK
COALspot.com: The Dry Bulk market continued its upward movement last week, with the BDI closing off on Friday (26 June) in excess of 800 points, wh ...
Wednesday, 01 July 15
Q4'15 AND Q1'16 FOB RICHARDS BAY COAL SWAPS ROSE W-O-W AND M-O-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 rose month over month and down week over week.
The Q3 swap was up US$ ...
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- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- White Energy Company Limited
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
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