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