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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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Thursday, 26 March 15
KYUSHU ELECTRIC POWER OF JAPAN HAS JOINED GLOBALCOAL ONLINE COAL TRADING PLATFORM
globalCOAL® announced today that Kyushu Electric Power, one of Japan’s largest utility companies, has joined its online coal trading plat ...
Wednesday, 25 March 15
MARKET INSIGHT: TANKER CHARTERING - KATERINA RESTIS
The 1st of January 2015, as broadly reported, denoted the beginning date of new and progressive emission regulations for vessels operating within t ...
Wednesday, 25 March 15
AUSTRALIA SET TO ONCE AGAIN BE THE WORLD'S LARGEST COAL EXPORTER - COAL, MINERALS COUNCIL OF AUSTRALIA
Greg Evans, Executive Director - Coal, Minerals Council of Australia
Media Release: The latest Resources and Energy Quarterly published by the ...
Wednesday, 25 March 15
AUSTRALIA UPSTREAM ENERGY FIRMS FACE RISING OIL PRICE EXPOSURE - FITCH
Fitch Ratings says the Australian oil and gas companies involved in exploration and production face higher exposure to oil price-linked revenues, w ...
Wednesday, 25 March 15
2014 : UK COAL IMPORTS DECLINED 17%; GERMANY COAL IMPORTS UP 6%
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
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- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Australian Coal Association
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
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