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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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- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
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