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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, 04 October 22
INDONESIAN COAL PRICE REFERENCE SURGE AGAIN TO RECORD HIGH
COALspot.com: Indonesian Coal Price Reference reached another record high in October as Russia's war in Ukraine continues to spark a surge in c ...
Sunday, 02 October 22
MISC STRENGTHENS ITS PARTNERSHIP WITH SEARIVER MARITIME
MISC Berhad (MISC) today announced that its subsidiaries Polaris LNG Three Pte. Ltd. and Polaris LNG Four Pte. Ltd. have secured long-term time cha ...
Thursday, 29 September 22
MARKET INSIGHT - INTERMODAL
This week, focus turns to the 38th APPEC Conference, where leading professionals from the global oil industry will discuss the future key drivers o ...
Thursday, 29 September 22
HIGH COAL PRICES REMAIN A CONCERN FOR DOMESTIC NON-FERROUS METAL COMPANIES - ICRA
According to ICRA on Monday, the high price of coal will have a negative effect on the profitability of domestic non-ferrous metal companies that m ...
Tuesday, 27 September 22
14% INCREASE IN EUROPEAN COAL DEMAND TO BE SHORT-TERM TREND - WOOD MACKENZIE
European seaborne thermal coal demand is projected to increase 14% or 12 million metric tonnes (Mt) this year to 98 Mt as it grapples with the curr ...
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- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- PTC India Limited - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Bhatia International Limited - India
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Indika Energy - Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- White Energy Company Limited
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
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