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