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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, 24 April 15
CHINA IRON ORE MINE CLOSURES TO SLOW ON GOVERNMENT SUPPORT - FITCH
Fitch Ratings expects fewer Chinese iron ore mine closures in 2015 as the government takes steps to support the industry, which has been struggling ...
Friday, 24 April 15
IS INDIA THE 'NEW CHINA' WHEN IT COMES TO THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been feeling the “heat” of China’s slowdown and together with the industry’s own failings, with ove ...
Friday, 24 April 15
GLOBAL STEEL PRODUCTION OUTSIDE OF CHINA CONTINUES TO FARE VERY POORLY - JEFFREY LANDSBERG
COALspot.com: Data released this week showed that global crude steel production totaled approximately 138.05 million tons in March.
Wha ...
Friday, 24 April 15
WEEKLY U.S. COAL PRODUCTION ESTIMATE FALLS 5.7% FROM LAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.0 million short ...
Wednesday, 22 April 15
PANAMAX : ATLANTIC HOLDING ON TO THE GAINS OF THE PREVIOUS WEEK; PACIFIC BUSINESS SLID QUIETLY
COALspot.com: The Dry Bulk market managed to close off the week on a positive note last Friday, while as opposed to what we have been used to, it w ...
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- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Marubeni Corporation - India
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
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