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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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Friday, 26 June 15
INDONESIA COAL PRODUCTION FALLS BETWEEN JAN-MAY : JG
The Ministry of Energy and Mineral Resources announced that coal production declined to 166 million tons between January and May, a 19 percent drop ...
Friday, 26 June 15
COAL PRODUCTION IN THE U.S ROSE 6.0% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.3 million short ...
Thursday, 25 June 15
THE PORT OF NEWCASTLE SHIPPED 13.31% MORE COAL IN MAY 2015 COMPARED TO APRIL 2015
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.18 billio ...
Thursday, 25 June 15
CAPESIZE: PERIOD INTEREST REMAINED STRONG FOR A SECOND WEEK - INTERMODAL
COALspot.com: Following those depressive last six months, the BDI closed off on last Friday noting a substantial weekly increase, which pushed the ...
Wednesday, 24 June 15
PANAMAXES: THE OUTLOOK REMAINS NEGATIVE AS DEMAND FOR COAL IS DIMINISHING - YANNIS OLZIERSKY
As we get closer to the end of June, we can safely say that the 1st half of the year is leaving the dry bulk market with a bitter taste that we all ...
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- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Economic Council, Georgia
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