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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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Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
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- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Minerals Council of Australia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
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