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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, 28 January 16
WHAT ARE THE PROSPECTS FOR COAL IN LIGHT OF THE PARIS CLIMATE AGREEMENT? - GERMAN COAL IMPORTERS ASSOCIATION
This depends – says the VDKi – to a very great extent on who you want to believe more, the United Nations or the International Energy A ...
Thursday, 28 January 16
RICHARDS BAY COAL SWAPS FOR Q1,Q2 AND Q3 DELIVERIES FIRM THIS PAST WEEK
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap rose month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coa ...
Wednesday, 27 January 16
API 5 FOB NEWCASTLE COAL SWAPS CLOSE MIXED
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.17 per ton (3.13%) this past week compared to the sam ...
Wednesday, 27 January 16
CHINA'S STALLING ECONOMY HAS HAD A GREAT EFFECT ON VARIOUS COMMODITIES; DECREASED DEMAND DRIVING COMMODITY PRICES LOWER AND LOWER - LINOS ALEXANDROS KOGEVINAS
Having gone through the first few weeks of 2016, it’s starting to look like another challenging year is ahead of us. Hopes for a recovery in ...
Wednesday, 27 January 16
WORLD HARD COAL PRODUCTION AND CONSUMPTION DECLINE IN 2015 FOR THE FIRST TIME IN OVER A DECADE - VDKI
COALspot.com: Seaborne hard coal trade and the changes in this area were decisively affected by China and India - VDKi.
China bears the g ...
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- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Posco Energy - South Korea
- PTC India Limited - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
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