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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, 05 September 14
U.S. PRODUCED 19.2 MMST OF COAL LAST WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Thursday, 04 September 14
PUNJAB STATE POWER CORPORATION LIMITED OF INDIA HAS DECIDED TO BUY IMPORTED COAL - HINDUSTAN TIMES
COALspot.com: The Punjab State Power Corporation Limited (PSPCL) has decided to buy imported coal to run its thermal plants, as reported by Hindust ...
Thursday, 04 September 14
INDONESIAN COAL MINERS MAY GET MORE TIME ON ROYALTIES - FITCH RATINGS
COALspot.com: Fitch Ratings says that coal miners in Indonesia are likely to get more time to repay the government the royalties that were set off ...
Thursday, 04 September 14
INDONESIAN COAL SWAPS SLIDE THIS PAST WEEK
COALspot.com: Indonesian coal swaps for average October 2014 decreased US$ 0.90 (-1.68%) day on day and US$ 1.80 (-3.31%) per mt week on week. The ...
Thursday, 04 September 14
CAPESIZE : SENTIMENT REMAINS POSITIVE FOR Q3/Q4 - FEARNRESEARCH
Handy
The Atlantic market has experienced more activity this week. Rates for TA´s are up about 8% w-o-w, much lead by an increasing number ...
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- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Australian Coal Association
- PTC India Limited - India
- The University of Queensland
- White Energy Company Limited
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
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