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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, 20 July 15
CFR SOUTH CHINA COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 1.18 (2.27%) per MT month over month.
A commodity swap ...
Sunday, 19 July 15
BDI GAINED AND CROSSED 1000 MARK THIS WEEK
COALspot.com: The BDI gained and crossed 1000 mark after many months this Friday. The BDI was up almost 20 pct and closed 1048 points on 17 July 20 ...
Saturday, 18 July 15
INTERVIEW : FRANZ ESCALANTE, CHIEF OF INFORMATION SYSTEMS, MINERA CHINALCO, PERU
We are interested in the technology of Autonomous trucks, the new-generation trucks are not remote controlled, they are truly autonomous - Franz Es ...
Friday, 17 July 15
COAL PRODUCTION IN THE U.S. INCREASES SHARPLY FOR THE WEEK ENDING JULY 11
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.4 million short ...
Friday, 17 July 15
INDONESIAN POWER-STATION COAL SWAPS DECLINE CONTINUES THIS PAST WEEK
COALspot.com: Indonesian coal swap for delivery Q3 2015 declined month on month and week over week, this past week.
The Q3 swap was declined $ ...
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- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
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