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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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- Price Waterhouse Coopers - Russia
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- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
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- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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- Thai Mozambique Logistica
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
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- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
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- Sinarmas Energy and Mining - Indonesia
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- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Africa Commodities Group - South Africa
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- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
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- Parry Sugars Refinery, India
- Parliament of New Zealand
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- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Australian Coal Association
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- GN Power Mariveles Coal Plant, Philippines
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- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
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- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
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- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
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- The Treasury - Australian Government
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- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
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- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
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- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
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- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
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- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
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- IEA Clean Coal Centre - UK
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- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
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