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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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Monday, 31 March 14
CFR SOUTH CHINA COAL SWAP FOR Q2 14 DELIVERY LOST 1.17% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.17 percent month on month and closed at US$ 75.38 per m ...
Sunday, 30 March 14
FREIGHTS FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK - REDDY
COALspot.com: The freight market dropped drastically and all sectors were affected severely.
The BDI was down by 14.13 pct and closed at 1, ...
Friday, 28 March 14
US PRODUCED APPROXIMATELY 18.9 MMST IN A WEEK - EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Friday, 28 March 14
CHINA'S ENVIRONMENTAL MEASURES WILL NOT CURB GROWTH IN DOMESTIC STEEL PRODUCTION AND SEABORNE IRON ORE - WOOD MACKENZIE SAYS
Steel plants in China have been targeted as a major source of the toxic smog enveloping Beijing and Shanghai. Emergency measures have been impos ...
Thursday, 27 March 14
PANAMAX : SEEMS TO HEAD FURTHER DOWN; CAPESIZE : ANOTHER CHOPPY AND UNPREDICTABLE WEEK - FEARNLEYS AS
Handy
A weaker sentiment for the smaller size as well, with reduced activity in the Atlantic where Owners have to face significantly lower ret ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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