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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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Tuesday, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Planning Commission, India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Parliament of New Zealand
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
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