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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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- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Economic Council, Georgia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Planning Commission, India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
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