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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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- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- VISA Power Limited - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- PTC India Limited - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Australian Coal Association
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
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