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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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Thursday, 10 March 16
IT FEELS SAFE TO SAY THAT THE MARKET IS SLOWLY AND PAINFULLY REGAINING ITS BALANCE
With the BDI marking its third consecutive positive weekly closing, it feels safe to say that the market is regaining its balance; slowly and painf ...
Wednesday, 09 March 16
U.S. COAL EXPORTS DECLINED 24% (74 MMST) IN 2015; COAL PRODUCTION IS EXPECTED TO DECREASE BY 111 MMST IN 2016 - EIA
U.S. Coal Supply
EIA estimates that U.S. coal production for February 2016 was 54 million short tons (MMst), a 4 MMst (7%) decrease from the prev ...
Wednesday, 09 March 16
RI MAY HAVE TO IMPORT COAL FOR FUTURE POWER PLANTS: STUDY - THE JAKARTA POST
With coal prices continuing to decline, Indonesia will struggle to provide the coal needed to fire up its power stations in the near future, a stud ...
Tuesday, 08 March 16
INDONESIA HIKES COAL BENCHMARK PRICE FOR THE FIRST TIME IN 12 MONTHS
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further deep in February 2016, but up slightly in Mar ...
Tuesday, 08 March 16
THE DRY CARGO MARKET ENDURED ONE OF ITS MOST DIFFICULT YEARS IN 2015, EXPERIENCING LOWS NOT SEEN SINCE THE MID 1980S - CLARKSONS
Whilst shipping and offshore markets have seen some good opportunities during 2015, overall there have been unprecedented challenges, so we are ver ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- White Energy Company Limited
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
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