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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, 17 August 15
INDONESIAN THERMAL COAL REFERENCE PRICE HITS RECORD LOW AGAIN!
COALspot.com - The Director General of Mineral and Coal of Indonesia revised down Indonesian coal benchmark price once again to US$ 59.14 per MT fo ...
Monday, 17 August 15
CFR SOUTH CHINA COAL SWAPS CONTINUE TO HEAD SOUTH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US cents 40 (1.05%) per MT month over month.
A commodi ...
Sunday, 16 August 15
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO STEADY NEXT WEEK
COALspot.com: The BDI softened 12.08 per cent to 1055 points this week due to weakening of cape index which was fell 25 per cent week over week to ...
Friday, 14 August 15
FOB INDONESIA COAL SWAP SHOWING NO MOVEMENT THIS PAST WEEK
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week, this past week.
The 4Q swap was declined $ ...
Friday, 14 August 15
U.S. COAL PRODUCTION UP 2.9 PER CENT THIS WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.2 million shor ...
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- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
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- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Economic Council, Georgia
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
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- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- White Energy Company Limited
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- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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