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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, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting inv ...
Wednesday, 08 October 14
IS THERE ANY BRIGHT SIDE ON THE DRY BULK SEGMENT? - YANNIS OLZIERSKY
In the movie “Life Of Brian”, a character on a nearby cross was singing the famous “Always look on the bright side of life” ...
Tuesday, 07 October 14
TAIPOWER TO IMPORT 525K MT OF LOW ASH AND EXTRA LOW SULFUR SUB-BITUMINOUS COAL
COALspot.com: Taiwan Power Company intends to procure 525,000 metric tons of low ash and extra low sulfur sub-bituminous coal for Taipower thermal ...
Tuesday, 07 October 14
SUB-BIT FOB INDONESIA COAL SWAP SHOWS A FLAT TO WEAK TREND THIS PAST WEEK
COALspot.com: Indonesian coal swaps November 2014 delivery flat week on week and gained US$ 0.10 (-0.20%) per mt day on day. The swap also lost US$ ...
Tuesday, 07 October 14
THE RIO TINTO CONFIRMS THAT NO DISCUSSIONS ARE TAKING PLACE WITH GLENCORE
COALspot.com: The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.The Rio Tinto bo ...
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- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
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