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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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Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
Sunday, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
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- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Interocean Group of Companies - India
- Parliament of New Zealand
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- The University of Queensland
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Aditya Birla Group - India
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