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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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- VISA Power Limited - India
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- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- White Energy Company Limited
- Minerals Council of Australia
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
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