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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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Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
Wednesday, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 0.2 ...
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- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Planning Commission, India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- The University of Queensland
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
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