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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, 18 March 15
Q2 INDONESIAN COAL SWAP DROP 1.45% M-O-M; GAIN 0.63% W-O-W
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and gained week over week.
The Q2 swap fell US$ 0.70 (1.45%) ...
Tuesday, 17 March 15
GAS TO CHALLENGE COAL IN THE ASIAN POWER GENERATION MIX - WOOD MACKENZIE
KNOWLEDGE TO ELEVATE
Wood Mackenzie says that coal is facing increasing competition from gas in the power sector. Coal has dominated as the fu ...
Tuesday, 17 March 15
RIO TINTO PAID US$ 7.1 BILLION IN TAXES IN 2014
COALspot.com: Rio Tinto has published its latest Taxes paid report, detailing the US$7.1 billion in taxes paid by the company around the world in 2 ...
Tuesday, 17 March 15
NEARLY 17% OF US COAL PRODUCTION UNECONOMIC AT CURRENT MARKET PRICING - WOOD MACKENZIE
COALspot.com: Close to 17% of forecast 2015 US coal production is at risk of idling or closure, totalling 162 million short tons (Mst), as these mi ...
Tuesday, 17 March 15
Q3' SA COAL SWAP CLOSED $57.30 PMT W/E 13 MARCH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and gained week on week.
The Q2 swap has fe ...
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- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- The University of Queensland
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- ASAPP Information Group - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
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