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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 December 22
AUSTRALIA TO CAP PRICES OF COAL, GAS TO DRIVE DOWN ENERGY BILLS - REUTERS
Australia will cap coal and gas prices for a year in a bid to shave utility bills for households and businesses hit by soaring costs because of the ...
Tuesday, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
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- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Australian Coal Association
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
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