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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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Friday, 14 November 14
U.S. WEEKLY COAL OUTPUT SLIPS SLIGHTLY WEEK ENDING NOVEMBER 08
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Friday, 14 November 14
MORE NATURAL GAS FROM RUSSIA TO HELP STABILISE CHINA PRICES - FITCH RATINGS
COALspot.com: Fitch Ratings has said possible additional natural gas supplies from Russia's OAO Gazprom to China via the Altai pipeline would h ...
Thursday, 13 November 14
SLOWER AND LOWER HAS BEEN THE TREND OF THE PANAMAX IN BOTH HEMISPHERES - FEARNLEYS
Handy
We are experiencing an oversupply of tonnage in the Atlantic which is out numbering the amount of cargoes, Fearnleys broker says in its lat ...
Thursday, 13 November 14
DRY BULK MARKET'S REBOUND HINGES ON IRON ORE OVERSUPPLY ISSUES MOVING FORWARD - HELLENIC SHIPPING NEWS
“One man’s benefit, is another man’s demise” is a phrase which can be used to describe today’s situation in the dry b ...
Thursday, 13 November 14
COAL MINISTER WANTS INDIA TO STOP COAL IMPORTS IN TWO OR THREE YEARS
COALspot.com: India to ramp up coal production to a billion tonnes by 2019 from its current level of 490 million tones. According to Power and Coal ...
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- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
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