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