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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, 01 June 15
35,000 MW POWER PLANTS TO BOOST COAL CONSUMPTION - JP
The government’s program to develop 35,000 megawatt (MW) power plants will increase domestic coal consumption, which currently stands at arou ...
Monday, 01 June 15
API 5 FOB NEWCASTLE COAL SWAP; Q1'16 CLOSED LOWER COMPARED TO Q3'15
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery gained US$ 0.36 per MT (0.80%) month over month. The swap was closed at US$ ...
Monday, 01 June 15
CFR SOUTH CHINA COAL SWAP: GAINED W-W, M-M; Q1'16 CLOSED HIGHER THAN Q3'15
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery up US$ 1.15 (2.26%) per MT month over month.
A commodity swap is a f ...
Sunday, 31 May 15
CAPE AND PANAMAX SEGMENTS SLIDE CONTINUES
COALspot.com: The BDI was up about 0.5 pct week on week and closed at 589 points while the cape index was fell 0.73 pct and closed at 810 po ...
Friday, 29 May 15
DRY BULK MARKET IS THE VICTIM OF A SHIFT IN DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The fall in dry bulk freight rates is attributed, in large part, to the substantial decrease of China’s thermal coal imports, a major commodi ...
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- Coal and Oil Company - UAE
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- SMC Global Power, Philippines
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
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- India Bulls Power Limited - India
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- Ministry of Mines - Canada
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- Minerals Council of Australia
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- Global Business Power Corporation, Philippines
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- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
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- Alfred C Toepfer International GmbH - Germany
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- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- ASAPP Information Group - India
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- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
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- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Singapore Mercantile Exchange
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- Ministry of Finance - Indonesia
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- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Planning Commission, India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- The University of Queensland
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
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- VISA Power Limited - India
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- GAC Shipping (India) Pvt Ltd
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- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
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- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
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- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
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- Commonwealth Bank - Australia
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- Medco Energi Mining Internasional
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- Parliament of New Zealand
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- Kohat Cement Company Ltd. - Pakistan
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- Electricity Authority, New Zealand
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- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
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- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
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- Metalloyd Limited - United Kingdom
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