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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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- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- VISA Power Limited - India
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
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