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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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- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
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