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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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Monday, 12 December 16
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO BE SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this past week and ending on a negative note week ...
Thursday, 08 December 16
STABLE OUTLOOK FOR GLOBAL MINING IN 2017 : FITCH
Fitch Ratings' sector and rating outlooks for the global mining industry in 2017 are both stable, reflecting Fitch's view that prices have ...
Thursday, 08 December 16
CHINESE COAL DEMAND WOULD BE THE KEY FACTOR THAT INFLUENCE WORLD COAL PRICES IN 2017, POLL
“WHAT ARE THE KEY FACTORS THAT MAY INFLUENCE WORLD'S COAL PRICES IN 2017?”
The on-line opinion poll conducted by COALspot.com ...
Thursday, 08 December 16
PANAMAX: THE FIRM TENDENCY CONTINUES IN BOTH HEMISPHERES - FEARNLEY
Supramax
Market remained firm - true mostly within Atlantic.
Star performer USG remained its title, where Supras reached around USD 21k ...
Wednesday, 07 December 16
SHIPPING MARKET INSIGHT - THEODOROS NTALAKOS
Looking back at my previous end-of-year insights, for the last seven years, in each and every one of them, I begin with something like “there ...
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- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- The University of Queensland
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Planning Commission, India
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