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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, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Minerals Council of Australia
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