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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, 19 February 16
INDONESIAN HBA HITS A NEW LOWS BELOW $51 A TON AS OVERSUPPLY, LOW DEMAND WOES PERSIST
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further deep in February 2016. HBA has slumped second time t ...
Friday, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
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