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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, 29 November 16
US WEEKLY COAL OUTPUT TOTALS 17.2 MMST, UP 2.8% : EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17.2 million short ton ...
Monday, 28 November 16
BALTIC DRY INDEX FALLS TO 1181 POINT, DOWN 76 POINTS W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities down slightly and ending in a negative note this past wee ...
Thursday, 24 November 16
SUPRAMAX: SOUTH AFRICA STILL STRONG WITH OWNERS ACHIEVING AROUND USD 14-15K FOR TRIPS EAST - FEARNLEYS
Supramax
A positive kick-off in both the Atlantic and the Pacific. Very healthy rates within USG, some supras receiving well over 20k for trips t ...
Wednesday, 23 November 16
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
The Organization of the Petroleum Exporting Countries (OPEC) is due to finalize a reduction in total production at its next scheduled meeting in Vi ...
Tuesday, 22 November 16
ITALY'S STEAM COAL IMPORTS EXPECTED TO DECLINE 7% Y/Y TO 15 MILLION TONS IN 2017 - ITALIAN COAL ASSOCIATION
Italy’s steam coal imports expected to decline to 15 million tons in 2017, or 7% less imports compared to 2016. The coking coal imports are e ...
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- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Australian Coal Association
- Eastern Energy - Thailand
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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