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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, 20 February 14
LENGTHY DELAYS TO PANAMA CANAL EXPANSION POSE GLOBAL TRADE RISKS; US COAL PRODUCERS TO GREATLY BENEFIT ONCE COMPLETE, SAYS WOOD MACKENZIE
Wood Mackenzie expects the recent cost overrun disputes around the Panama Canal expansion to be resolved with limited disruption due to the signific ...
Thursday, 20 February 14
SUPRAMAX: IN ASIA IS IMPROVING SIGNIFICANTLY AND TURNED FROM APS TO DOP MARKET
Handy
The activity is back in the market after Chinese holidays. Supramax in Asia is improving significantly and turned from APS to DOP market. We ...
Wednesday, 19 February 14
NEWCASTLE PORT SHIPPED 30% MORE COAL WEEK ON WEEK
COALspot.com: In the week ended 17 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 18 February 14
PERUVIAN HIGH COMMISSIONER FOR MINING AFFAIRS WILL BE KEY NOTE SPEAKER AT THE COLOMBIAN COAL CONFERENCE 2014
Press Release: The High Commissioner for Mining Affairs in the Presidency of the Peruvian Council of Ministers, General (R) Daniel Urresti Elera, ha ...
Monday, 17 February 14
US COAL PRODUCTION IN 2013 FELL TO ITS LOWEST LEVEL IN 20 YEARS
COALspot.com: U.S coal production for 2013 totaled an estimated 996 million short tons (MMst), 21 MMst (2%) lower than in 2012. It is the first time ...
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- Global Business Power Corporation, Philippines
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- Australian Coal Association
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- New Zealand Coal & Carbon
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- Independent Power Producers Association of India
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- ICICI Bank Limited - India
- The University of Queensland
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- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
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- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
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- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
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- Wilmar Investment Holdings
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- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
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- Trasteel International SA, Italy
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- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
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- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
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- Dalmia Cement Bharat India
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- Energy Development Corp, Philippines
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- Romanian Commodities Exchange
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- Billiton Holdings Pty Ltd - Australia
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