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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, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
Wednesday, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
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- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- PTC India Limited - India
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Economic Council, Georgia
- Minerals Council of Australia
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- The University of Queensland
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