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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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- VISA Power Limited - India
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Planning Commission, India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
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