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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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Wednesday, 23 July 14
WEEKLY SHIPPING MARKET INSIGHT - INTERMODAL
In Australia, the world’s largest mining group, BHP Billiton, will beat the iron ore export target of more than 220 million tonnes for 2014. ...
Wednesday, 23 July 14
HARD COAL 2013: THE WORLD'S SECOND-MOST IMPORTANT ENERGY SOURCE AND GUARANTOR FOR THE SECURITY OF ENERGY SUPPLIES DURING TIMES OF CRISIS
Hard coal is again in 2013 the fastest-growing fossil primary energy source in the world. As shown in the BP Statistical Review 2014, it covered ab ...
Tuesday, 22 July 14
INDONESIAN ELECTION RESULT ENCOURAGING FOR FOREIGN INVESTMENT IN ENERGY AND MINING SECTORS - WOOD MACKENZIE
Joko Widodo-Jusuf Kalla has been announced as the official winner of Indonesia's presidential election. Joko Widodo, or Jokowi, is viewed as a ...
Tuesday, 22 July 14
THE CURRENT COAL PRICES ARE UNPROFITABLE FOR MINERS; COAL PRICES WILL GRADUALLY INCREASE - FITCH
COALspot.com: The Fitch Ratings expect the benchmark Newcastle coal prices (currently at about USD70/MT) to gradually increase.
Fitch's la ...
Tuesday, 22 July 14
SUB-BIT FOB INDONESIA COAL Q3' 14 DOWN 5.21%; Q4' 14 DOWN 3.56%; Q1' 15 DOWN 4.75% M-O-M
COALspot.com: Indonesian coal swaps for average Q3’ 2014 flat on day, weak week on week and on month according to AsiaClear OTC coal swap' ...
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- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
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- Indian Oil Corporation Limited
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- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
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- Orica Mining Services - Indonesia
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- Economic Council, Georgia
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- Power Finance Corporation Ltd., India
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- Indonesian Coal Mining Association
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- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
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- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
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- Star Paper Mills Limited - India
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- Petron Corporation, Philippines
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- Kalimantan Lumbung Energi - Indonesia
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- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
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- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
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- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Aditya Birla Group - India
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- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
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- Petrochimia International Co. Ltd.- Taiwan
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- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
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- Karbindo Abesyapradhi - Indoneisa
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- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
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- White Energy Company Limited
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