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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, 08 May 15
COAL PRODUCTION IN U.S. UP 3.2% THIS PAST WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.4 million short ...
Wednesday, 06 May 15
COMBINATION OF HOLIDAYS AND A SHAKY MARKET PUT ADDITIONAL PRESSURE ON RATES
COALspot.com: The combination of holidays and a shaky market is always a recipe for additional pressure on rates and last week was no exception. Wi ...
Wednesday, 06 May 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
The first four months of 2015 are now behind us and they make up for a decent amount of time to look back and assess how the year is evolving so fa ...
Tuesday, 05 May 15
MIFA BERSAUDARA UNIT OF ABM INVESTAMA STARTS OPERATING $200M COAL MINE IN ACEH
Reswara Minergi Hartama, a coal mining unit of coal miner ABM Investama known as known as Reswara, inaugurated a $200 million integrated coal minin ...
Tuesday, 05 May 15
FREIGHT DERIVATIVE VOLUMES REACHED TOTALED 14,154 CONTRACTS IN APRIL - SGX
COALspot.com: “Our unique suite of freight and bulk commodity products provides market participants with a wide range of trading strategies a ...
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- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
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