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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, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
The second wave of COVID-19 is now a reality; offices are closing again, and stricter rules and regulations are being implemented in public spaces. ...
Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.49 points Monday, up 0.82 percent week on week.
The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
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