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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, 10 April 19
KOSPO INVITED BIDS FOR 160K MT OF MIN. 3700 NCV COAL FOR JUNE LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 160,000 MT of min. 3,800 Kcal/kg ~max.4,100 ...
Wednesday, 10 April 19
CHINA'S GROWING THERMAL COAL SUPPLY TO PRESSURE EXPORTERS - FITCH RATINGS
Growing Chinese thermal coal supply is likely to lead to further tightening of import controls by the government, putting pressure on seaborne coal ...
Wednesday, 10 April 19
SHIPPING MARKET INSIGHT - INTERMODAL
The tragedy in Brazil’s Vale Brumadinho where a tailings dam collapsed in January ranks among the world’s worst mining disasters. It co ...
Monday, 08 April 19
5TH INDIA NUCLEAR NEW BUILD CONGRESS 2019
5th India Nuclear New Build Congress 2019
The congress in Mumbai aims to bring together representatives from governments, regulators ...
Monday, 08 April 19
THERMAL COAL PRICES FALL, INDIAN POWER PLANTS TO SEE LIMITED GAINS - BUSINESS STANDARD
Thermal coal prices are on a downward spiral globally. Australian coal prices have fallen nearly 20 per cent in the past week, and 40 per cent from ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
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