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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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Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
Sunday, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- White Energy Company Limited
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
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