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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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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- GMR Energy Limited - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
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- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- White Energy Company Limited
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- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- The University of Queensland
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
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