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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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- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- PTC India Limited - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Parliament of New Zealand
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- The University of Queensland
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
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