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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, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
Monday, 20 July 20
OIL PRICE OF $40-43 PER BARREL MORE OR LESS BALANCED - NOVAK | TASS
The Russian Ministry of Energy considers the current oil price of $40-43 per barrel more or less balanced and does not expect price changes after t ...
Monday, 20 July 20
SUPRAMAX: A 63,000 OPEN NORTH CHINA FIXING AN AUSTRALIAN ROUND IN THE LOW $10,000S - BALTIC BRIEFING
Capesize
The capesize market showed some resistance this week to recent losses as all routes saw a small uptick in value to end the week. With ...
Friday, 17 July 20
MISC MALAYSIA ENTERS INTO PURCHASE AGREEMENTS AND TIME CHARTER PARTIES FOR SIX VLECS
MISC Berhad (MISC) has entered into Memorandum of Agreements (MOAs) with six indirect wholly-owned subsidiaries of Zhejiang Satellite Petrochem ...
Wednesday, 15 July 20
HOW MEANINGFUL ARE SOME ESTIMATES FOR INDIA’S COAL CONSUMPTION DATA? - IEEFA
In recent years, BP's estimates for India have contained what appears to be a record of over-optimistic projections
BP’s a ...
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- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- The University of Queensland
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
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