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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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Monday, 24 August 15
IS CHINA'S STEEL EXPORTS ENOUGH TO SUPPORT THE FREIGHT MARKET? - BIMCO
No, it’s not enough, you will need lower Chinese iron ore production too in order to keep growing imports of iron ore into China that will su ...
Sunday, 23 August 15
SHIPPING FREIGHT RATES FALL SHARPLY ON EXCESS SUPPLY AND LOW DEMAND
COALspot.com: The BDI continued to soften and was down 5.78 pct and falls back below 1000 points this week.
The cape Index lost 17.25 per cent ...
Friday, 21 August 15
U.S. YEAR-TO-DATE COAL PRODUCTION VOLUME FALLS 8.7% Y-O-Y
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.3 million shor ...
Friday, 21 August 15
GLOBALCOAL TO LAUNCH ONLINE TRADING OF PHYSICAL MET COAL ON 13 OCTOBER
On 13 October 2015, globalCOAL will launch an online platform for the physical procurement and trade of high quality hard coking coal delivered FOB ...
Thursday, 20 August 15
COAL PRICES FALL TO 12-YEAR LOWS AS CHINA, INDIA JOIN DEMAND SLOWDOWN - REUTERS
Coal futures have fallen to 12-year lows, hit by soaring production and a slowdown in global buying, including from India and China which until rec ...
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- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Australian Coal Association
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
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