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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 April 15
Q4' 2015 API 8 CFR SOUTH CHINA COAL SWAP CLOSED US$ 50.28 PMT
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.03 (-7.28%) per MT month over month and US$ 0.05 (-0 ...
Sunday, 19 April 15
THE OCEAN FREIGHT MARKET SHOWED STEADY THIS WEEK
COALspot.com: The freight market was fairly steady this week. The BDI was up 2.93% to 597 points week over week. The cape index was also increased ...
Friday, 17 April 15
IHS ENERGY EUROPEAN COAL OUTLOOK CONFERENCE
Attend the IHS Energy European Coal Outlook Conference 19-20 May in Nice, France and learn about timely concerns in today’s coal industry.
...
Friday, 17 April 15
COAL PRODUCTION IN THE U.S. UP THIS PAST WEEK - EIA
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 18.0 million short ...
Thursday, 16 April 15
NEW COMMODITY SUPERHIGHWAY WILL EMERGE IN CHINA, ALTERING ENERGY TRADE FLOWS - WOOD MACKENZIE
Wood Mackenzie says that China’s Go West strategy – encouraging coastal to inland flow of capital and people - will result in the forma ...
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- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Planning Commission, India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- The University of Queensland
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
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