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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, 22 November 16
THE COMMODITIES MARKETS HAD SHOWED GREATER PROMISE SINCE THE SUMMER PERIOD - GEORGE LAZARIDIS
We have all borne witness to the sluggish pace of trade growth witnessed during the course of the past 4 years as well as the even slower pace note ...
Monday, 21 November 16
CHINA IS ESTIMATED TO SEE HIGHEST IMPORTED COAL DEMAND LEVEL IN 2017, POLL SAYS
“Which country is estimated to see highest imported coal demand level in 2017?”
The on-line opinion poll conducted by COALsp ...
Monday, 21 November 16
KOMIPO IS LOOKING FOR 140K MT OF SUB-BITUMINOUS COAL FOR FEB-MAR 2017 LOADING
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 140,000 Metric Tons of Sub-Bituminous coal for i ...
Monday, 21 November 16
BALTIC DRY INDEX SURGES TO 1257 POINTS W/E 18 NOV; BPI ROSE 37.3% W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rally continues this past week and ending on a positive n ...
Friday, 18 November 16
CAPESIZE: THE COMMODITIES PRICES ARE INCREASING, RESULTING IN MORE DEMAND AND CONSEQUENTLY RATES ARE MAKING A BIG JUMP - FEARNLEYS
Supramax
Apart from booming S. Africa where owners have obtained USD 14-15k to MEG/India and around mid USD 12k to China, the Pacific market has ...
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- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Australian Coal Association
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Planning Commission, India
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
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