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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, 20 May 16
U.S COAL PRODUCTION FOR THE WEEK ENDED 14 MAY TOTALED 11.4 MMST; UP 3.8% W/W
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.4 million short tons (mm ...
Thursday, 19 May 16
AUSTRALIAN IRON ORE CARGOES PUSHED UP THE FREIGHT RATES FOR CAPE THIS WEEK - FEARNLEYS
Cape
It has been a big jump in the freight rates for Cape size this week, says Fearnleys in its latest weekly report. All of the Australian iron ...
Thursday, 19 May 16
DISPUTE OVER VAT ON COAL DRAGS ON, CAUSING DOUBLE-BLOW TO MINERS - JP
The dispute over the value-added tax ( VAT ) mechanism between coal miners operating under third-generation contracts and the Finance Ministry&rsqu ...
Wednesday, 18 May 16
DRY BULK OUTLOOK REMAINS GLOOMY SAYS DANISH SHIP FINANCE, AS SHIPPING NEEDS TO RETHINK BUSINESS MODEL - HELLENIC SHIPPING
Our Shipping Market Review – May 2016 is devoted to the fourth industrial revolution. To understand the truly disruptive nature of the fourth ...
Wednesday, 18 May 16
LONG TERM FUNDAMENTALS ARE SLOWLY IMPROVING FOR THE DRY BULK MARKET - INTERMODAL
As we are approaching the end of the first half of the year, there is a number of market participants over at the dry bulk sector that have started ...
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- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- PTC India Limited - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
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