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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, 30 June 22
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Thursday, 30 June 22
DIVERGENCE BETWEEN HIGH- AND LOW-GRADE THERMAL COAL PRICES IN APAC TO NARROW - FITCH RATINGS
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- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- The University of Queensland
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
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