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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, 02 June 17
U.S THE PAST WEEK'S COAL PRODUCTION ESTIMATE UP 4.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15 million short tonnes ...
Wednesday, 31 May 17
MARKET INSIGHT - KONSTANTINOS KAKAVITSAS
In the next episode of the oil market; The market reacts to OPEC’s production cut extension, the US shale oil producers are ruining the carte ...
Tuesday, 30 May 17
MARKET ANALYSIS - GEORGE LAZARIDIS
Despite the fair performance that has been noted in the Chinese economy over the past 5 months, we have started to see an increase in the skepticis ...
Friday, 26 May 17
MOST COAL PLANTS IN THE UNITED STATES WERE BUILT BEFORE 1990 - EIA
Coal-fired electricity generators accounted for 25% of operating electricity generating capacity in the United States and generated about 30% of U. ...
Friday, 26 May 17
U.S WEEKLY COAL OUTPUT ESTIMATE UP 6.3% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 14.3 million short ton ...
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- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
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