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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, 15 April 16
U.S WEEKLY COAL OUTPUT FALLS ACROSS ALL BASINS - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 10.2 million short tons (mm ...
Thursday, 14 April 16
AUSTRALIAN MINING SERVICES SECTOR SQUEEZED BY MINERS' COST CUTS - FITCH RATINGS
Fitch Ratings says mining services companies' revenues and margins will remain under pressure as miners continue to focus on reducing costs ami ...
Thursday, 14 April 16
DRY BULKERS' PRICES COULD BE HEADING UPWARDS AS BUYERS' APPETITE INCREASES - HELLENIC SHIPPING NEWS
Investment sentiment is beginning to trend upwards in the market for second hand dry bulk carriers. According to the latest weekly report from ship ...
Wednesday, 13 April 16
U.S COAL PRODUCTION IS EXPECTED TO DECREASE BY 16 PER CENT IN 2016; THE LARGEST ANNUAL PERCENTAGE DECLINE SINCE 1958 - EIA
EIA estimates that U.S. coal production in March 2016 was 52 million short tons (MMst), a 2 MMst (4%) decrease from the previous month and 29 MMst ...
Tuesday, 12 April 16
INDONESIA COAL BENCHMARK PRICE INCREASES FOR SECOND STRAIGHT MONTH
COALspot.com: The Indonesia Coal Benchmark Price Increases For Second Straight Month in April 2016.
The Director General of Mine ...
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- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Australian Coal Association
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
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