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