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