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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, 13 November 15
WEAK CHINA POWER DEMAND DAMPENS COAL CONSUMPTION - FITCH
The weak growth in China's electricity consumption in 2015, together with increasing non-thermal power generation capacity are exerting more pr ...
Friday, 13 November 15
DRY BULK, IT IS HARD TO MAINTAIN AN OPTIMISTIC VIEW FOR THE NEXT COUPLE OF MONTHS - INTERMODAL
COALspot.com: The dry bulk owners looking for cover remained under pressure for size segments across the board. With Capes closing off the week as ...
Friday, 13 November 15
WEEKLY US COAL PRODUCTION DECLINES TO 16.5 MMST; SLIDE 14.9% Y-Y: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Thursday, 12 November 15
FOREIGN COAL MINE ACQUISITION - STRATEGY VERSUS OPPORTUNITY FOR INDIAN UTILITIES - DIPESH DIPU
The acquisition market for thermal coal assets abroad is dull. Sellers of all hues are in the market; some are actively scouting for buyers while o ...
Thursday, 12 November 15
PORT OF NEWCASTLE'S COAL EXPORT VOLUME UP IN OCTOBER 2015
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.254 billio ...
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- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
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