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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, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- Ind-Barath Power Infra Limited - India
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- IEA Clean Coal Centre - UK
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- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
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- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
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- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
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- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
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- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
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- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
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- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- PTC India Limited - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
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- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
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- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
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- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
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- White Energy Company Limited
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- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
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- Merrill Lynch Commodities Europe
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