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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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Sunday, 26 July 15
INDO-INDIA OCEAN COAL FREIGHT RATES REMAIN STEADY
COALspot.com: The freight market continued lost steam towards end of the week and all indices were showing downward trend.
The BDI was up by 3 ...
Friday, 24 July 15
U.S PRODUCED 17.2 MMST OF COAL FOR THE WEEK ENDED JULY 18; FELL 11.5% YEAR ON YEAR
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.2 million shor ...
Friday, 24 July 15
THE IMPACT OF COLLAPSING CHINESE COAL IMPORTS - CLARKSONS
Global seaborne coal trade is currently projected to drop 1% y-o-y in 2015, which would be the first annual decline in almost three decades. The dr ...
Thursday, 23 July 15
ELEVEN NEW NICKEL SMELTERS ARE TO BE BUILT IN INDONESIA OVER THE NEXT TWO YEARS AT A COST OF $1.4 BILLION
Indonesia’s Most Reputable Nickel Event
Eleven new nickel smelters are to be built in Indonesia over the next two years at a cost of $1. ...
Thursday, 23 July 15
THE CAPESIZE SEGMENT KEPT FOUNDING SUPPORT ON INCREASED DEMAND FROM CHINESE STEEL MILLS - INTERMODAL
The Dry Bulk market closed off on Friday (17July 2015) noting substantial gains and the BDI surpassing the 1,000 points level for the first time af ...
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- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
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- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
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- Commonwealth Bank - Australia
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- The University of Queensland
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- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- PTC India Limited - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- CNBM International Corporation - China
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