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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, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
Thursday, 05 May 16
DRY BULK MARKET ON REVERSE MODE, AS HOLIDAYS AROUND THE WORLD HURT DEMAND - HELLENIC SHIPPING NEWS
The dry bulk market’s recent rally has been put on a temporary hold, as various holidays around the world have put a stop in it. In its lates ...
Wednesday, 04 May 16
COAL IMPORTS: A VOLATILE MATTER OR STILL POWERING DOWN? - CLARKSONS
Chinese coal imports decreased significantly in 2014-15, and so far in 2016 the pace of decline appears to have slowed, with imports even recording ...
Wednesday, 04 May 16
IS THE DRY BULK MARKET OUT OF THE WOODS YET, OR NOT? - HELLENIC SHIPPING NEWS
Things are beginning to brighten up in the beleaguered dry bulk market, which is riding on a multi-week rally to find itself around the “psyc ...
Wednesday, 04 May 16
POWER - WEEK: REAL EXAMPLES AND CASE STUDIES
POWER WEEK
7 - 11 November 2016, PARKROYAL on Beach Road Hotel, Singapore
www.power-week.com
Overview
Designed for the global e ...
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- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- The University of Queensland
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Australian Coal Association
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
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