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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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Monday, 12 September 22
COAL PRICE HIKE REMAINS DIFFICULT FOR CIL: CHAIRMAN TELLS ANALYSTS - PTI
Coal India on Thursday informed investors that increasing coal prices remains difficult in the current context when the economy is grappling with h ...
Friday, 09 September 22
GREECE WILL KEEP COAL-FIRED PLANTS RUNNING FOR LONGER AMID GAS CRISIS - REUTERS
Greece will keep seven coal-fired plants running for longer than previously planned as European countries adjust to a cut in gas flows coming from ...
Friday, 09 September 22
CHINA'S DROUGHT INTENSIFIES GLOBAL COAL SHORTAGE - REUTERS
China’s drought has sent coal prices surging as traders anticipate the lack of hydroelectric generation will force it to burn more coal to me ...
Thursday, 08 September 22
MOODY.S AFFIRMS ABM INVESTAMA'S B1 RATINGS FOLLOWING PLANNED MINORITY INVESTMENT IN COAL MINER; OUTLOOK STABLE
Moody's Investors Service has affirmed ABM Investama Tbk (P.T.)'s B1 corporate family rating (CFR), along with the B1 rating on its senior ...
Thursday, 08 September 22
MARKET INSIGHT - INTERMODAL
While the energy markets are historically stretched, Russian flows of crude oil are closely monitored as the oil trade is ultimately realigned. Mor ...
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- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- White Energy Company Limited
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Planning Commission, India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
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