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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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Sunday, 20 January 19
OIL MARKET REPORT: A MARATHON, NOT A SPRINT - IEA
Last month, we asked if there was a floor under prices following the signing of a new Vienna Agreement that aims to re-balance the oil market. Foll ...
Thursday, 17 January 19
EIA ESTIMATES THAT U.S. COAL EXPORTS WERE 116 MMST IN 2018, 20% HIGHER THAN THE AMOUNT EXPORTED IN 2017
Coal Supply
EIA estimates that coal production declined by 20 million short tons (MMst) (3%) in 2018, despite a 19 MMst increase in U.S. coal e ...
Thursday, 17 January 19
U.S COAL OUTPUT IS EXPECTED TO FALL BY 3 PER CENT IN 2019 - EIA
EIA forecasts that U.S. coal production will total 729 million short tons (MMst) in 2019, down by 25 MMst (3%) from 2018.
Acco ...
Wednesday, 16 January 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we go through the first days of the year and just a few weeks before the Chinese New Year, the ship repair sector is witnessing a big difference ...
Monday, 14 January 19
KOREA SOUTHERN POWER INVITES BIDS FOR 320,000 MT OF MIN 3,800 NCV COAL
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 3,800 kcal/kg NCV coal for ...
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- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
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