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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, 21 February 17
CHINESE EXPORTS SHOWED A YEAR-ON-YEAR RISE FOR THE FIRST TIME IN TEN MONTHS; S. KOREA'S EXPORTS UP FOR PAST THREE MONTHS IN A ROW - GEORGE LAZARIDIS
We have started to some sparks of life in the commodities markets these past weeks, with prices having shown a strong push during the past couple o ...
Tuesday, 21 February 17
CHINA SUSPENDS COAL IMPORTS FROM NORTH KOREA FROM 19 FEB
COALspot.com: China is suspended coal imports from North Korea until December 2017. China says it will suspend all imports of coal from North Korea ...
Monday, 20 February 17
OCEAN FREIGHT RATES SLIGHTLY UP WEEK OVER WEEK
COALspot.com: The Freight market was firmed up this past week. The Panamax segment was declined for the week ending 17 February 2017.
The Balt ...
Friday, 17 February 17
U.S. COAL PRODUCTION SLIPS SLIGHTLY WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.5 million sh ...
Thursday, 16 February 17
CAPE MARKET HAVE EXPERIENCED A STRONG DOWNTURN - FEARNLEYS
Supramax
Market has shifted sides from Atlantic to Pacific, where Atlantic is now lagging behind with little action and sliding indices, notably ...
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- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Marubeni Corporation - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Planning Commission, India
- Chamber of Mines of South Africa
- The University of Queensland
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
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