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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, 17 September 14
SHIPPING MARKET INSIGHT - GEORGE LAZARIDIS
Since the onslaught of 2013 the rising tide of asset prices had been primarily driven by the increasing freight market conditions and the improving ...
Tuesday, 16 September 14
INDONESIAN GOVERNMENT DECLARED HBA SUFFERED ANOTHER SETBACK IN SEPTEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in September. HBA for ...
Tuesday, 16 September 14
INDONESIAN COAL OUTPUT WON'T EXCEED 421M TONS: GOVT - JP
The government is optimistic that it will meet its coal production target for this year, which caps nationwide production at a flat number compared ...
Monday, 15 September 14
CHINA'S COAL PROPOSALS LEAVE SOME HOPE FOR EXPORTERS - DAILY NEWS
When the best thing you can say about new policies is that they aren’t as bad as they could have been, then you know your industry is in deep ...
Monday, 15 September 14
SUB-BIT FOB INDONESIA COAL SWAP, JANUARY 2015 DELIVERY GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.40 (+0.78%) day on day and US$ 0.55 (+1.08%) per mt week on week. The ...
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- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
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- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
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- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
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- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
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- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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