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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, 16 May 16
THE FREIGHT MARKET WAS WEAK AND ALL SEGMENTS EXCEPT PANAMAX WERE DOWN
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities decline this week.
The freight market was weak and a ...
Friday, 13 May 16
COAL CARGOES - SOME RECENT DEVELOPMENTS: SWEDISH CLUB
KNOWLEDGE TO ELEVATE
Indonesia continues to be amongst the world’s major exporters of coal, some 426Mt being traded in 2013 mostly to In ...
Friday, 13 May 16
US WEEKLY COAL PRODUCTION IS RUNNING 33% BELOW THE SAME PERIOD IN 2015 - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.9 million short tons (mm ...
Friday, 13 May 16
DRY BULK SHIPPING MARKET RECOVERY WILL BE A LONG, HARD-FOUGHT BATTLE - HELLENIC SHIPPING NEWS
Anyone who expects a strong rally in dry bulk market rates to end the industry’s downturn will be bitterly disappointed. By contrast – ...
Wednesday, 11 May 16
U.S. FORECAST COAL PRODUCTION IS EXPECTED TO DECLINED BY 150 MMST IN 2016; THE LARGEST DECLINE SINCE 1949 - EIA
COALspot.com: EIA estimates that U.S. coal production in April was 46 million short tons (MMst), a 6 MMst (12%) decrease from the previous month an ...
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- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Planning Commission, India
- GMR Energy Limited - India
- PTC India Limited - India
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