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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, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Australian Coal Association
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
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