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