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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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Saturday, 30 August 14
INDIAN GOVERNMENT SHOULD TAKE NOTICE: THERMAL COAL IMPORT PRICES EXTREMELY LOW - COMMODORE RESEARCH
COALspot.com: Both Indonesian and Australian thermal coal prices are at the lowest levels seen this decade, with Indonesia's monthly benchmark ...
Saturday, 30 August 14
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Despite weak freight rates so far this year, Dry Bulk shipping earnings are forecast to recover as demand for both major and minor bulk commodities ...
Friday, 29 August 14
U.S. WEEKLY COAL PRODUCTION DROPS 1.3 PERCENT, EIA SAYS
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Friday, 29 August 14
ADARO'S PROFITS SINK FURTHER AMID FALL IN COAL PRICES - JP
Adaro Energy, one of the country’s largest coal miners, has reported a 31 percent drop in net profit in the first half of this year as global ...
Friday, 29 August 14
CHINESE LIGNITE IMPORTS: QUANTITY OVER QUALITY? - CLARKSONS
In the first half of 2014, Chinese seaborne coal imports declined 0.4% y-o-y to 148mt, largely reflecting a 3.3% fall in imports of steam coal. Mea ...
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- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
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