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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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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- White Energy Company Limited
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
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