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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, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
Tuesday, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
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- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Economic Council, Georgia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
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- Australian Coal Association
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Interocean Group of Companies - India
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- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- PTC India Limited - India
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
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