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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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Friday, 19 August 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 421.6 MMST
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
Thursday, 18 August 16
CAPESIZE: AN EXTREMELY VOLATILE LAST WEEK, WHERE THE MAIN DRIVER HAS BEEN THE WEST AUSTRALIA MARKET
Supramax
The week has held up. After the most of the world is back at work there is some optimism again in the market. The Far East volume has in ...
Tuesday, 16 August 16
WEEKLY CS42 COAL INDEX SOARS 14.08% YEAR TO DATE AMID HIGH DEMAND
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 2.37% week over week to averaging $42.84 per ton this past week, shows CS (i) C ...
Monday, 15 August 16
DRY BULK: 2017 COULD MARK THE START OF LOWER SHIP DELIVERIES HELPING TONNAGE SUPPLY ISSUES IN THE MARKET, SAYS SHIPOWNER - HELLENIC SHIPPING NEWS
Dry bulk owner Pacific Basin, mainly active in the Handysize and Supramax trades appeared optimistic in its analysis of the prospects of the dry bu ...
Monday, 15 August 16
INDONESIAN COAL PRICES RALLYING; COAL OUTPUT REMAINS FLAT
COALspot.com: Global thermal coal prices, including Indonesian coal prices have risen sharply due to jump in imports from China as it curbs domesti ...
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- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- PTC India Limited - India
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Minerals Council of Australia
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
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