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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, 12 October 16
MARKET INSIGHT - LINOS KOGEVINAS
Another Monday has gone by, bringing with it further turbulence for oil. A series of meetings between high-production nations Russia & Saudi Ar ...
Wednesday, 12 October 16
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The sharp increase in coking coal prices since August 2016 could squeeze Indian steelmakers' profitability and threaten their deleveraging, Fit ...
Wednesday, 12 October 16
UK SEABORNE COAL IMPORT PLUNGES 64% AS A WORRYING TREND LURKS - BIMCO
The main exporters of thermal coal for coal- fired power plants to the United Kingdom (UK) have experienced a heavy decline in seaborne cargo volum ...
Monday, 10 October 16
INDONESIAN COAL PRICE REFERENCE HITS HIGHEST LEVELS SINCE SEPTEMBER 2014
COALspot.com: The Indonesia coal benchmark price hits to its highest level since September 2014. The government declared benchmark prices for Indon ...
Monday, 10 October 16
THE FREIGHT MARKET FIRMS UP ON STRONG CAPE PERFORMANCE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose again and ending in a positive note this past week. ...
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- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
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