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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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Friday, 02 June 17
U.S THE PAST WEEK'S COAL PRODUCTION ESTIMATE UP 4.4% - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15 million short tonnes ...
Wednesday, 31 May 17
MARKET INSIGHT - KONSTANTINOS KAKAVITSAS
In the next episode of the oil market; The market reacts to OPEC’s production cut extension, the US shale oil producers are ruining the carte ...
Tuesday, 30 May 17
MARKET ANALYSIS - GEORGE LAZARIDIS
Despite the fair performance that has been noted in the Chinese economy over the past 5 months, we have started to see an increase in the skepticis ...
Friday, 26 May 17
MOST COAL PLANTS IN THE UNITED STATES WERE BUILT BEFORE 1990 - EIA
Coal-fired electricity generators accounted for 25% of operating electricity generating capacity in the United States and generated about 30% of U. ...
Friday, 26 May 17
U.S WEEKLY COAL OUTPUT ESTIMATE UP 6.3% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 14.3 million short ton ...
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- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
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