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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, 30 May 14
US COAL PRODUCTION RELATIVELY FLAT WEEK ON WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 18.6 million short tons (mmst) of coal in a ...
Thursday, 29 May 14
PEABODY ENERGY CHAIRMAN RECEIVES WCA AWARD
The World Coal Association has presented Gregory H. Boyce, Chairman and Chief Executive Officer of Peabody Energy (NYSE: BTU), with the 2014 Chairm ...
Thursday, 29 May 14
HANDY : THE SUPRAS ARE BEING TRADED AROUND 13K FOR SHORTER UPTO 1 YEAR PERIOD
Handy
The week started off with bank holidays in London and very little happening. This trend has continued and we believe it will continue into ...
Wednesday, 28 May 14
THE DRY BULK MARKET REMAINED UNDER PRESSURE - INTERMODAL
COALspot.com: The Dry Bulk market remained under pressure during this past week, with all indices pointing down compared to the previous Friday. Th ...
Tuesday, 27 May 14
PORT OF NEWCASTLE SHIPPED 19.13% LESS COAL THIS PAST WEEK
COALspot.com: In the week ended 07:00 hours 26 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, ...
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- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- The University of Queensland
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
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- Wilmar Investment Holdings
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- Price Waterhouse Coopers - Russia
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- London Commodity Brokers - England
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- Toyota Tsusho Corporation, Japan
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- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
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- Maheswari Brothers Coal Limited - India
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- Chamber of Mines of South Africa
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- Minerals Council of Australia
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- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
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- Energy Link Ltd, New Zealand
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- Semirara Mining Corp, Philippines
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- Sindya Power Generating Company Private Ltd
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- Directorate Of Revenue Intelligence - India
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- Pipit Mutiara Jaya. PT, Indonesia
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- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
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- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
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- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
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- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
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- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
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- OPG Power Generation Pvt Ltd - India
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- The State Trading Corporation of India Ltd
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- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
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- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
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- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Planning Commission, India
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
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- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
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- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
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