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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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Wednesday, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
Wednesday, 16 December 20
INDONESIAN COAL RECOVERING - FITCH
Commenting on Indonesian coal, Fitch Ratings, the Indonesian 4,200 kcal index has begun to recover, improving to over USD 29 in November compared t ...
Tuesday, 15 December 20
NEWCASTLE PRICES RECOVER - FITCH
Prices for the benchmark Newcastle 6,000 kcal/kg grade coal have rebounded to over USD 70/tonne since late November as major Asian economies ease l ...
Tuesday, 15 December 20
APAC COAL PRICES REBOUND ON IMPROVED DEMAND AND SUPPLY CUTS - FITCH RATINGS
Prices for the benchmark Newcastle 6,000kcal/kg grade coal have rebounded to over USD70/tonne since late November as major Asian economies ease loc ...
Tuesday, 15 December 20
CHINA EXTENDS FULL OPEN GESTURE TO IMPORTED COAL EXCEPT FOR AUSTRALIA - GLOBAL TIMES
Domestic, overseas suppliers will take up share with easier clearance
China's top economic planner on Saturday gave approval to ...
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- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Minerals Council of Australia
- Planning Commission, India
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Australian Coal Association
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- India Bulls Power Limited - India
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- The University of Queensland
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
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