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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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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- White Energy Company Limited
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
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