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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, 11 April 16
BDI ROSE TO ITS HIGHEST LEVEL IN FOUR MONTHS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 08 April 16
COASTAL ENERGEN CROSSES GENERATION OF 1068 MW AND EXPORT OF 1004 MW FROM ITS 1200 MW IPP
COALspot.com: Coal & Oil (C&O) Group, an India centric Energy & Infrastructure company announced that their Coastal Energen' ...
Friday, 08 April 16
WEEKLY US COAL PRODUCTION ESTIMATES DIP 5.4% TO 11 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11 million short ...
Friday, 08 April 16
MINISTER OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO ISSUE REGULATION TO GUARANTEE THE COAL SUPPLY TO ITS 35K POWER PLANT PROJECTS
COALspot.com: In order to guarantee the supply of coal for 35,000 megawatt (mw) coal based power plants ( still in planning stage), the Minister of ...
Thursday, 07 April 16
CHINA STEEL CAPACITY CUTS FACE SOCIAL, FINANCIAL HURDLES - FITCH RATINGS
Fitch Ratings says today that the Chinese government's supply-side reform of the steel sector faces immense social and financial challenges. Th ...
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- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- PTC India Limited - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
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