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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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- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- The University of Queensland
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
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