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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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Sunday, 04 December 16
U.S. WEEKLY COAL OUTPUT DECLINED 11.9% W/E 26 NOV; UP 1.4% Y/Y, EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.2 million short ton ...
Thursday, 01 December 16
OIL PRICES MAY SEE LITTLE GROWTH BEFORE 2018, FITCH RATINGS SAYS
High inventories and the potential for US shale production to respond quickly to any market tightening mean oil prices may flat line in 2017 before ...
Thursday, 01 December 16
CHINA 2017 OIL, GAS OUTPUT DROP MAY WORSEN ON CAPEX CUT: FITCH
China's oil and gas production may shrink even more in 2017 than in 2016 after the country's leading oil companies cut exploration and prod ...
Thursday, 01 December 16
ANOTHER WONDERFUL WEEK FOR PANAMAX - FEARNLEY
Supramax
A slower start to the week in the Pacific compared to last Trips from N. China to S. China is paying in the range of low USD 5k, while I ...
Tuesday, 29 November 16
AUSTRALIA'S PORT OF NEWCASTLE SHIPPED 13.08 MT OF COAL IN OCTOBER; DOWN 10.39% M/M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU1,124.7 Mi ...
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- Ministry of Mines - Canada
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
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