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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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Tuesday, 27 February 18
SHELL SEES POTENTIAL LNG SUPPLY SHORTAGE AS GLOBAL DEMAND SURGES
Media Release: The global liquefied natural gas (LNG) market has continued to defy expectations of many market observers, with demand growing by 29 ...
Saturday, 24 February 18
CHINA BECOMES WORLD'S SECOND LARGEST LNG IMPORTER, BEHIND JAPAN - EIA
China surpassed South Korea to become the world’s second-largest importer of liquefied natural gas (LNG) in 2017, according to data from IHS ...
Friday, 23 February 18
ESTIMATED U.S. WEEKLY COAL PRODUCTION UP 2.8 PER CENT W/E 17 FEB' 18 - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.6 million short tons ...
Thursday, 22 February 18
WHY THE COMMODITY RALLY WILL GET BACK ON TRACK - SIMON FLOWERS
Implications for the US dollar and producers
Are we in the early stages of a sustained rise in commodity prices? And what does it mean for the ...
Thursday, 22 February 18
PANAMAX: IT HAS BEEN A SLOW AND UNEVENTFUL WEEK - FEARNLEYS
Supramax
Slight improvement from Atlantic with more hope for upcoming weeks. More grain cargoes from Black Sea made fhaul rates better again $17- ...
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- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Australian Coal Association
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- VISA Power Limited - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
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