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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, 01 November 16
IMPROVEMENT ON THE DEMAND SIDE ONLY BUT THE SUPPLY SIDE IS WORSE OFF - BIMCO
Back in May, BIMCO disclosed a projected “road to recovery” for the dry bulk shipping industry. The main message back then on what the ...
Monday, 31 October 16
INDONESIAN 5000 GAR COAL ROSE 5.56% WEEK OVER WEEK - CS COAL INDEX
COALspot.com: The price for thermal coal has recovered substantially since April 2016. The China’s new policy on its domestic coal miners, th ...
Friday, 28 October 16
STEAM COAL IMPORTS: CHINA AND INDIA'S ROLE REVERSALS - BEN TRIMMEL
While a sharp decline in European imports is a key driver of the expected fall in steam coal trade this year, China and India remain leading actors ...
Friday, 28 October 16
U.S. WEEKLY COAL OUTPUT ROSE DURING THE WEEK ENDING OCTOBER 22 - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.5 million short ton ...
Thursday, 27 October 16
73.08 PERCENT OF COAL PRODUCERS PREDICTED INDIA WILL NOT STOP COAL IMPORTS IN 2 TO 3 YEARS - POLL
COALspot released its weekly opinion poll "How likely do you think India will STOP thermal coal imports in 2-3 years?" this Monday.
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- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- The University of Queensland
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
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