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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, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
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- The State Trading Corporation of India Ltd
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- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
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- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
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- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
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- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
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- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
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- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- GMR Energy Limited - India
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
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