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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, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
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- Sical Logistics Limited - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Australian Coal Association
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
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