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