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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, 02 July 18
THIESS SECURES NEW QCOAL NORTHERN HUB $480M CONTRACT
Thiess has been awarded a new A$480 million contract by QCoal to continue operations at the QCoal Northern Hub located in Queensland’s Bowen ...
Friday, 29 June 18
THE LBH GROUP AND RHENUS PLAN TO ESTABLISH A JOINT COMPANY
Press Release: The port services provider, the LBH Group, and the logistics specialist Rhenus, are planning to cooperate closely in the European in ...
Friday, 29 June 18
SUPRAMAX: INDO / CHINA COAL ROUNDS PAYING AROUND USD HIGH 11000 - FEARNLYS
Capesize
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Friday, 29 June 18
JAPAN'S TOHOKU ELEC, GLENCORE ABANDON APRIL-MARCH COAL CONTRACT TALKS - REUTERS
Japan’s Tohoku Electric Power Co Inc and Glencore Plc have abandoned talks on annual thermal coal supplies after failing to reach an agreemen ...
Wednesday, 27 June 18
SHIPPING MARKET INSIGHT - APOSTOLOS ROMPOPOULOS
After the abolishment of the trade embargo against Iran, there was a lot of optimism from the country’s side, as after quite some time a numb ...
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- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- The University of Queensland
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
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