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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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Wednesday, 18 March 15
Q2 INDONESIAN COAL SWAP DROP 1.45% M-O-M; GAIN 0.63% W-O-W
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and gained week over week.
The Q2 swap fell US$ 0.70 (1.45%) ...
Tuesday, 17 March 15
GAS TO CHALLENGE COAL IN THE ASIAN POWER GENERATION MIX - WOOD MACKENZIE
KNOWLEDGE TO ELEVATE
Wood Mackenzie says that coal is facing increasing competition from gas in the power sector. Coal has dominated as the fu ...
Tuesday, 17 March 15
RIO TINTO PAID US$ 7.1 BILLION IN TAXES IN 2014
COALspot.com: Rio Tinto has published its latest Taxes paid report, detailing the US$7.1 billion in taxes paid by the company around the world in 2 ...
Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mi ...
Tuesday, 17 March 15
Q3' SA COAL SWAP CLOSED $57.30 PMT W/E 13 MARCH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and gained week on week.
The Q2 swap has fe ...
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- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
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- Siam City Cement PLC, Thailand
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- Electricity Authority, New Zealand
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- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
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- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
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- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
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- Orica Mining Services - Indonesia
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- Merrill Lynch Commodities Europe
- Economic Council, Georgia
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- Metalloyd Limited - United Kingdom
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- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
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- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
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- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
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- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
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- White Energy Company Limited
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- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Parliament of New Zealand
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- Planning Commission, India
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- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
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- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- PTC India Limited - India
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
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- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
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- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
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- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
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- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
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- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
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