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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, 18 April 16
INDONESIAN 5000 GAR COAL INDEX DECLINE 1.43 PERCENT WEEK OVER WEEK - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 1.43 percent week over week to averaging $38.65 per ton on this past Friday, ac ...
Monday, 18 April 16
SOUTH KOREA STATE-OWNED UTILITY KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 70,000 Metric Tons of 4,600 kcal/kg NAR coal for ...
Monday, 18 April 16
SOUTH AFRICA RB1 COAL HAS LOST GROUND IN INDIA; RB2 MAY LOSE GRIP IF THE PRICE CROSSES US$ 50 A TON - TRADERS
COALspot.com: Indian coal consumers preferred to buy South Africa RB2 coal instead of RB1 coal recent months due to RB2's low CFR price level. ...
Monday, 18 April 16
CAPESIZE INDEX ROSE 44.66 PER CENT WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 15 April 16
PANAMAX MARKET CONTINUES TO FIRM - FEARNLEYS
Cape
It has been a positive freight market for the past few weeks, however, this week the market is taking a small breather, says Fearnleys in it ...
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- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Cement Manufacturers Association - India
- Australian Coal Association
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
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