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