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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, 24 February 17
RUSSIAN OIL AND GAS WITHSTANDS OIL PRICE SHOCK - FITCH RATINGS
Fitch Ratings says in a new report that the Russian oil and gas sector has withstood the oil price stock of 1H16. Key events of 2016 include record ...
Friday, 24 February 17
US WEEKLY COAL OUTPUT ESTIMATED AT 16.8 MMST - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Thursday, 23 February 17
ULTRA SUPRAMAX: INDONESIA TO INDIA IS GETTING AROUND $10-11K BASIS SINGAPORE DELIVERY
Supramax
The week started off quietly in the Atlantic with more activity in the Pacific basin.
According to Fearnleys weekly report, frontha ...
Wednesday, 22 February 17
TANKER MARKET INSIGHT - KATERINA RESTIS
In 2016 a session of the IMO committee in London, set the new prerequisites effective from January 2020, which will necessitate global Sulphur cont ...
Tuesday, 21 February 17
INDIA'S JANUARY COAL IMPORTS DECLINE 21.7 PERCENT YEAR -ON-YEAR TO 14.31 MT - PTI
Coal imports declined by 21.7 per cent to 14.31 million tonnes in January as the power utilities did not lift much fuel due to abundant stock avail ...
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- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- The University of Queensland
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Bhatia International Limited - India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
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