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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, 15 October 19
INDIA READIES POLICY TO ATTRACT FOREIGN INVESTMENT IN COAL MINING - REUTERS
India expects to have formulated a policy within the next two weeks to attract foreign investment to its coal mining industry, the country's Co ...
Monday, 14 October 19
WINTER OIL MARKET OUTLOOK - OPEC
Product markets in the last two months have benefitted from seasonal maintenance which have led to a tighter product market environment, providing ...
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INDONESIA: PANAMAX VESSELS OPEN SOUTH CHINA WERE REPORTEDLY FIXED AT $14,000 LEVEL, WITH REDELIVERY BACK IN CHINA - BALTIC BRIEFING
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The Capesize market managed to find a floor and rally a little this week after several weeks of declines. While the West Australia to ...
Friday, 11 October 19
INDIAN MINERS REJECT PLAN TO LINK NATIONAL COAL INDEX TO FOREIGN PRICES - REUTERS
India’s miners are rejecting a government proposal to establish a national coal index that would be linked to international prices, documents ...
Friday, 11 October 19
THE OCTOBER BENCHMARK PRICE OF INDONESIAN THERMAL COAL DECLINES TO LOWEST SINCE OCTOBER 2016
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
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