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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, 24 April 15
CHINA IRON ORE MINE CLOSURES TO SLOW ON GOVERNMENT SUPPORT - FITCH
Fitch Ratings expects fewer Chinese iron ore mine closures in 2015 as the government takes steps to support the industry, which has been struggling ...
Friday, 24 April 15
IS INDIA THE 'NEW CHINA' WHEN IT COMES TO THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been feeling the “heat” of China’s slowdown and together with the industry’s own failings, with ove ...
Friday, 24 April 15
GLOBAL STEEL PRODUCTION OUTSIDE OF CHINA CONTINUES TO FARE VERY POORLY - JEFFREY LANDSBERG
COALspot.com: Data released this week showed that global crude steel production totaled approximately 138.05 million tons in March.
Wha ...
Friday, 24 April 15
WEEKLY U.S. COAL PRODUCTION ESTIMATE FALLS 5.7% FROM LAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.0 million short ...
Wednesday, 22 April 15
PANAMAX : ATLANTIC HOLDING ON TO THE GAINS OF THE PREVIOUS WEEK; PACIFIC BUSINESS SLID QUIETLY
COALspot.com: The Dry Bulk market managed to close off the week on a positive note last Friday, while as opposed to what we have been used to, it w ...
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- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- White Energy Company Limited
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
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