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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, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Australian Coal Association
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- PTC India Limited - India
- Thai Mozambique Logistica
- CNBM International Corporation - China
- The University of Queensland
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- White Energy Company Limited
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
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