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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, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
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- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Planning Commission, India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
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