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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, 13 December 17
REFINED COAL HAS MADE UP NEARLY ONE-FIFTH OF COAL-FIRED POWER GENERATION SO FAR IN 2017 - EIA
The U.S. power sector consumption of coal is increasingly shifting to refined coal, even as coal-fired electricity generation decreases. Use of ref ...
Wednesday, 13 December 17
DEMAND FOR THERMAL COAL LOOKED RELATIVELY ROBUST - DANIEL HYNES
Coal prices were a touch higher. Demand for thermal coal looked relatively robust, after reports continued to surface that Chinese authorities have ...
Wednesday, 13 December 17
SHIPPING MARKET INSIGHT - GEORGE PANAGOPOULOS
As another year is coming to an end and much has been already written about the positive reversal in the dry bulk market, we think it is interestin ...
Monday, 11 December 17
INDIA CONSUMERS ARE SAID TO BE DESPERATELY SEEKING CARGOES - DANIEL HYNES
Coal markets were stronger, as strong demand outside China continues to spur buying said Daniel Hynes, Senior Commodity Strategist at ANZ.
Acc ...
Monday, 11 December 17
CAPESIZE FFA MARKET LOOKING PROMISING MOVING FORWARD - FIS
Capesize
Another very promising day for the big ships as rates continued to firm in both oceans and the paper market ate into the backwardation s ...
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- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Australian Coal Association
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Marubeni Corporation - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Planning Commission, India
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
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