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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, 24 April 15
CHINA IRON ORE MINE CLOSURES TO SLOW ON GOVERNMENT SUPPORT - FITCH
Fitch Ratings expects fewer Chinese iron ore mine closures in 2015 as the government takes steps to support the industry, which has been struggling ...
Friday, 24 April 15
IS INDIA THE 'NEW CHINA' WHEN IT COMES TO THE DRY BULK MARKET? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
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Friday, 24 April 15
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COALspot.com: Data released this week showed that global crude steel production totaled approximately 138.05 million tons in March.
Wha ...
Friday, 24 April 15
WEEKLY U.S. COAL PRODUCTION ESTIMATE FALLS 5.7% FROM LAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 17.0 million short ...
Wednesday, 22 April 15
PANAMAX : ATLANTIC HOLDING ON TO THE GAINS OF THE PREVIOUS WEEK; PACIFIC BUSINESS SLID QUIETLY
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- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- The University of Queensland
- Thai Mozambique Logistica
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
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