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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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Wednesday, 20 May 15
TANKER MARKET INSIGHT - JOHN N. COTZIAS
Since Early October 2014 the tanker market has been experiencing a very positive momentum and has continued its strong performance so far in 2015. ...
Wednesday, 20 May 15
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COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 increased month over month and week over week.
The Q3 swap has increas ...
Wednesday, 20 May 15
BUKIT ASAM'S AVERAGE EXPORT PRICE WAS UNDER PRESSURE DURING Q1
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Wednesday, 20 May 15
IRON ORE PRICES TO REMAIN WEAK ON LOW DEMAND, HIGH OUTPUT - FITCH
Iron ore prices will stay low for several years due to increasing supply, weak demand growth in China and the slower-than-expected closure of high- ...
Tuesday, 19 May 15
KOMIPO IS SEEKING TOTAL 2.34 MMT OF HCV AND LCV COAL FOR 2015 - 2017
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 2.34 million Metric Tons (MT) of HCV ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
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- Ceylon Electricity Board - Sri Lanka
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- Petron Corporation, Philippines
- SMC Global Power, Philippines
- London Commodity Brokers - England
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- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
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- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
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- Coal and Oil Company - UAE
- Planning Commission, India
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- Indian Energy Exchange, India
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- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
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- Thai Mozambique Logistica
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- Australian Coal Association
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- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
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- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
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- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
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- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
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- Interocean Group of Companies - India
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- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
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- Indian Oil Corporation Limited
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- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
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- Indonesian Coal Mining Association
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