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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, 29 April 16
U.S. COAL IMPORTS IN Q4' 15 DECLINED TO 2.7 MMST FROM 3 MMST IN Q3' 15
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.3 million short tons (mm ...
Thursday, 28 April 16
PRICES OF POWER-STATION COAL IN INDONESIA IS INCREASING
COALspot.com: Inquiries for Indonesian 4200 - 4400 Kcal/kg GAR thermal coal cargoes from India suddenly increase recent days.
A Jakarta-based ...
Thursday, 28 April 16
KOMIPO TO IMPORT 710K MT OF BITUMINOUS COAL DURING JULY - SEPTEMBER 2016
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 710,000 Metric Tons of Bituminous Coal for its B ...
Thursday, 28 April 16
CAPE: BIT MORE OPTIMISM IN THE MARKET; SUPRAMAX: FORWARD CURVE IS FALLING - FEARNLEYS
Cape
A bit of a slower week. Activity level has dropped, though the rates do still remain firm, says Fearnleys in its latest weekly report.
...
Wednesday, 27 April 16
THE OCEAN SHIPPING EXPERIENCED DRAMATIC VOLATILITY IN THE BEGINNING OF 2016 - PANOS TSILINGIRIS
Shipping’s new (ab)normal
The global economy and ocean shipping experienced dramatic volatility in the beginning of 2016 and as the glob ...
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- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- The University of Queensland
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
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