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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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Friday, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
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