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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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Monday, 15 August 16
THE SPOT FREIGHT MARKET STRENGTHEN OVER THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose as Cape and Panamax segments ending in a positive no ...
Friday, 12 August 16
U.S. WEEKLY COAL OUTPUT ENDING AUGUST 6 FELL SLIGHTLY
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.9 million short ton ...
Thursday, 11 August 16
CAPESIZE THE PACIFIC SIDE IS LOOKING MORE POSITIVE, DRIVEN BY AUSTRALIAN IRON ORE - FEARNLEYS
Supramax
Rates continue to be under pressure with index ending up with 639 points and average TC value at USD6,680, said Fearnleys. Fearnleys A/S ...
Thursday, 11 August 16
EIA ESTIMATES THE DELIVERED COAL PRICE TO U.S. ELECTRIC UTILITIES IN 2017 AVERAGED $2.24/MMBTU; $0.05/MMBTU HIGHER THAN 2016 ESTIMATES
Coal Supply
U.S. coal production in July was 65 million short tons (MMst), an 8 MMst (14%) increase from the previous month but 11 MMst (15%) low ...
Wednesday, 10 August 16
THE DRY BULK MARKET KEPT SOFTENING LAST WEEK; WE CAN SEE MUCH HEALTHIER NUMBERS STARTING SEPTEMBER
The Dry Bulk market kept softening last week as we have now started going through the traditionally quieter days of the summer season peak period, ...
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- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Edison Trading Spa - Italy
- The University of Queensland
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Australian Coal Association
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
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