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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, 10 January 17
SHIPPING MARKET 2017
After having entered into a New Year, fresh hopes seem to be high for this to be the turning point in the market that many have been looking forwar ...
Monday, 09 January 17
FFA SUPRAMAX: Q1 AND Q2 TRADING UP TO $7100 WHILE CAL17 PRINTED $7250 - FIS
Capesize
Sentiment has swung quickly on capes and although there appears to be a very short list for open tonnage in the Atlantic Feb dates appea ...
Monday, 09 January 17
COAL MARKETS WERE UNEXPECTEDLY ONE OF THE STRONGEST PERFORMERS OF 2016 - SGX
COALspot.com: Coal markets were unexpectedly one of the strongest performers of 2016, with domestic production restrictions in China as well as sup ...
Monday, 09 January 17
THE INDONESIA COAL BENCHMARK PRICE SLIDES AFTER THE RECENT RALLY
COALspot.com: The Indonesia coal benchmark price slides in January 2017 after the recent rally. The government declared benchmark prices for Indone ...
Friday, 06 January 17
U.S. WEEKLY ESTIMATED COAL PRODUCTION TOTALED APPROXIMATELY 12.4 MMST; DOWN 18.4% W/W - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 12.4 million short ton ...
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- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
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- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- The University of Queensland
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Australian Coal Association
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
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- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Planning Commission, India
- Baramulti Group, Indonesia
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