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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, 13 November 18
INDIA: POWER DEMAND UP; COAL STOCKS AT MINES AT A 5-YEAR LOW - FINANCIAL EXPRESS
Stocks at Coal India mines plunged to a five-year low of 21 million tonne (mt) in October, as a sudden surge in demand for the fuel from the power ...
Monday, 12 November 18
COAL BUSINESS REMAINS PROSPECTIVE - ANTARA
Coal business happened to be sluggish in the 2012-2015 period because coal prices in the world market fell sharply, but it has begun to crawl up si ...
Monday, 12 November 18
INDONESIA'S HBA ENDS DECLINE IN NOVEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 07 November 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
This has been another active week in the second-hand market for both the dry bulk and tanker sectors. Buying interest has recently increased, which ...
Monday, 05 November 18
TIGHTER FUEL RULES COULD RAISE SHIPOWNERS' COSTS AND CAPEX - FITCH RATINGS
More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies’ operating costs and capex n ...
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- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Planning Commission, India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
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