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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, 22 September 14
COAL SECTOR CHAOS - GENESIS TO REVELATION - DIPESH DIPU
COALspot.com: “Let there be light”, intends the government of India but the fuel side of the story paints a blackout. The recent Suprem ...
Monday, 22 September 14
CFR SOUTH CHINA COAL SWAPS LOST ON DAY, WEEK AND MONTH
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 3.10 (-4.50%) month over month and $ 0.95 PT MT week over ...
Monday, 22 September 14
INDONESIAN COAL SWAPS LOST WEEK ON WEEK AND MONTH OVER MONTH
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.35 (+0.69%) day on day and lost US$ 0.30 (-0.58%) per mt week on week. ...
Sunday, 21 September 14
CAPE INDEX LOST 17% W-O-W ; BALTIC DRY PLUNGES 106 POINTS
COALspot.com: This week the freight market softened a bit compared to last week.
BDI fell 8.97% week on week and closed BDI at 1075 points on ...
Friday, 19 September 14
U.S. WEEKLY COAL PRODUCTION RELATIVELY FLAT AT +0.1% - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
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- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- GMR Energy Limited - India
- The University of Queensland
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
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