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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, 25 July 14
U.S WEEKLY COAL PRODUCTION UP AROUND 3.5% WEEK ENDED JULY 19
COALspot.com – United States the world's second largest coal producer, produced approximately 19.00 million short tons (mmst) of coal in ...
Thursday, 24 July 14
INDONESIA'S JUNE 2014 COAL EXPORT VOLUME DOWN 6.82%; AVERAGE SELLING PRICE DOWN
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.70* ...
Thursday, 24 July 14
HANDY: SOUTH AFRICA SOFTENED A BIT, HERE RATES ARE AT AROUND 8K +150K BB FOR TRIPS EAST - FEARNLEYS AS
Handy
The handy market in the Atlantic is going sideways and a tick down on low activity. Levels hoovering around USD 5k on Supras. The SMX marke ...
Thursday, 24 July 14
INDONESIAN COAL EXPORTERS ARE REQUIRED TO OBTAIN ET-BATUBARA UNDER LATEST TRADE MINISTRY'S NEW REGULATION
COALspot.com: Indonesia's trade ministry has issued regulation No. 39/M-DAG/PER/7/2014 which is requires exporters of power plant coal as ...
Wednesday, 23 July 14
PANAMAXES WERE BACK ON A DOWNWARD COURSE; CAPES WERE FEELING THE MOST PRESSURE - INTERMODAL
COALspot.com: The Dry Bulk market was on a downward spiral this week, with the BDI noting another week-on-week decline of the magnitude of 10% this ...
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- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Planning Commission, India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
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