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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, 06 April 18
TOP MINER BHP QUITS WORLD COAL ASSOCIATION OVER CLIMATE CLASH - BLOOMBERG
BHP Billiton Ltd. has severed ties with the World Coal Association over a clash of views on how to combat climate change, with the mining giant say ...
Thursday, 05 April 18
INDONESIA TO POSTPONE NEW COAL, PALM OIL SHIPPING RULES TO 2020 - REUTERS
Indonesia will delay until 2020 trade rules requiring exporters of coal and crude palm oil to use only Indonesian-flagged vessels, government offic ...
Tuesday, 03 April 18
MARKET ANALYSIS - GEORGE LAZARIDIS
In the midst of a relatively quiet week for markets, with disruptions being caused by the Christian holidays, it seems as though we find ourselves ...
Monday, 02 April 18
THE FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT, SAYS VISTAAR
The freight market softening to continue. Thursday, March 29, 2018, the Baltic Dry Index decreased by 42 points, reaching 1080 points.
T ...
Monday, 02 April 18
THIESS TO DELIVER $150M SENAKIN CONTRACT EXTENSION
Thiess has secured a $150 million contract extension to provide mine services at Arutmin’s Senakin coal mine in South Kalimantan, Indonesia.
...
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- Posco Energy - South Korea
- Eastern Coal Council - USA
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- The University of Queensland
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
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