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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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Wednesday, 07 December 16
U.S. COAL PRODUCTION IS FORECAST TO INCREASE BY 2% IN 2017 - EIA
U.S. Coal production in November 2016 was 70.7 million short tons (MMst), the third time this year monthly production exceeded 70 MMst, says EIA.
...
Wednesday, 07 December 16
IT'S BEEN YET ANOTHER TURBULENT COUPLE OF DAYS..... - GEORGE LAZARIDIS
It’s been yet another turbulent couple of days, with a significant number of news headlines shaking up markets.
On Friday we had & ...
Monday, 05 December 16
INDIAN HYDROPOWER PRODUCTION AT LOWEST LEVEL SINCE 2012, SAYS COMMODORE RESEARCH
According to Commodore Research, the first eleven months of this year have seen India’s overall electricity production total approximately 1. ...
Monday, 05 December 16
THE DECEMBER 2016 HBA HITS TO ITS HIGHEST LEVEL SINCE MAY 2012
COALspot.com: The Indonesia coal benchmark price hits to its highest level since May 2012. The government declared benchmark prices for Indo ...
Monday, 05 December 16
BALTIC PANAMAX INDEX UP 5.98%; BALTIC CAPE INDEX FELL 2.52% W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rally slightly continues this past week and ending on a s ...
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- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Parliament of New Zealand
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- The University of Queensland
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- PTC India Limited - India
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
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