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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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- Parry Sugars Refinery, India
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- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
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- Chamber of Mines of South Africa
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
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- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- The University of Queensland
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- London Commodity Brokers - England
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Australian Coal Association
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- Mercator Lines Limited - India
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- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
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- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
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- Planning Commission, India
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- Directorate General of MIneral and Coal - Indonesia
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- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
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- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
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- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
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- Energy Development Corp, Philippines
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- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
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