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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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Monday, 17 November 14
SKULD ISSUES URGENT NOTICE ON BANKRUPTCY OF OW BUNKER A/S
Further to the Association’s advices of 7 November 2014, more information has come to light with respect to the potential impact and scale of ...
Monday, 17 November 14
INDONESIAN COAL PRICE REFERENCE CONTINUES FREE FALL; SLUMPS TO 69-MONTH LOW
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in November. HBA for t ...
Monday, 17 November 14
API 5 FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED AT $ 52.75
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery has decreased US$ 1.77 (-3.25%) month over month and US$ 0.02 (-0.04%) day ...
Monday, 17 November 14
SOUTH CHINA COAL SWAP SLIGHTLY INCREASED WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.73 (-2.67%) month over month and US$ 0.10 (-0.16%) da ...
Sunday, 16 November 14
THE BDI LOST 12.59% WEEK ON WEEK; THE BCI LOST 19.95%
COALspot.com: The BDI fell 12.59 percent to 1256 point week on week on Friday 14 November. All the segments were also most down this week. The cape ...
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- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
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