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