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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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Thursday, 15 May 14
USA COAL CONFERENCE
Press Release: IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Coal USA Conference, June 18-20, 2014, ...
Wednesday, 14 May 14
COAL PRICES IN CHINA HAVE DROPPED TO THEIR LOWEST LEVELS SINCE END-2008
COALspot.com: Coal prices in China have dropped to their lowest levels since end-2008, Fitch says in its latest rating report on one of the coal ...
Wednesday, 14 May 14
ALMOST THROUGH THE HALF OF THE YEAR, THE DRY BULK INDEX SHOW SIGNS OF WEAKNESS; CREATING TO BOTH EXISTING SHIP OWNERS AND POTENTIAL INVESTORS A LOT OF INSECURITY - PANOS MAKRINOS
Almost through the half of the year, the overall shipping market and more specifically the Dry Bulk Index show signs of weakness, creating to bo ...
Tuesday, 13 May 14
NPC COAL EXPORT VOLUMES PLUNGE TO 2.48 MMT WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 12 May 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Quee ...
Tuesday, 13 May 14
YET ANOTHER POSIDONIA EXHIBITION IS ON ITS WAY - INTERMODAL
With less than a month to go before another Posidonia exhibition starts and all the parties and celebrations get under way we thought that it wo ...
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- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
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- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Economic Council, Georgia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- The University of Queensland
- PTC India Limited - India
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- White Energy Company Limited
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
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