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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, 25 July 14
U.S WEEKLY COAL PRODUCTION UP AROUND 3.5% WEEK ENDED JULY 19
COALspot.com – United States the world's second largest coal producer, produced approximately 19.00 million short tons (mmst) of coal in ...
Thursday, 24 July 14
INDONESIA'S JUNE 2014 COAL EXPORT VOLUME DOWN 6.82%; AVERAGE SELLING PRICE DOWN
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.70* ...
Thursday, 24 July 14
HANDY: SOUTH AFRICA SOFTENED A BIT, HERE RATES ARE AT AROUND 8K +150K BB FOR TRIPS EAST - FEARNLEYS AS
Handy
The handy market in the Atlantic is going sideways and a tick down on low activity. Levels hoovering around USD 5k on Supras. The SMX marke ...
Thursday, 24 July 14
INDONESIAN COAL EXPORTERS ARE REQUIRED TO OBTAIN ET-BATUBARA UNDER LATEST TRADE MINISTRY'S NEW REGULATION
COALspot.com: Indonesia's trade ministry has issued regulation No. 39/M-DAG/PER/7/2014 which is requires exporters of power plant coal as ...
Wednesday, 23 July 14
PANAMAXES WERE BACK ON A DOWNWARD COURSE; CAPES WERE FEELING THE MOST PRESSURE - INTERMODAL
COALspot.com: The Dry Bulk market was on a downward spiral this week, with the BDI noting another week-on-week decline of the magnitude of 10% this ...
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- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- White Energy Company Limited
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Latin American Coal - Colombia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
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