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