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