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