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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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Wednesday, 22 October 14
CAPESIZE MARKET REMAINED UNDER PRESSURE
COALspot.com: The Dry Bulk market closed on the red for yet another week although following Friday sentiment has started to improve on the back of ...
Tuesday, 21 October 14
INDIA'S DIESEL DEREGULATION POSITIVE FOR OIL COMPANIES - FITCH
The Indian government's 18 October decision to deregulate diesel prices will have a positive effect on the national oil marketing companies tha ...
Tuesday, 21 October 14
LOW DEMAND PUTTING COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost on day, week and month.
The swap has lost US$ 1.57 (-3.04%) month on month ...
Monday, 20 October 14
CHINA'S ENVIRONMENTAL POLICIES DO NOT SPELL THE END FOR COAL - WOOD MACKENZIE
China's environmental policies do not spell the end for coal Analysis across energy commodities show coal still accounting for 64% of power mix ...
Monday, 20 October 14
CFR SOUTH CHINA COAL SWAPS FAILED TO PERFORM POSITIVE
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 3.04 (-4.57%) month over month and US$ 1.75 (-2.68%) week o ...
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- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- MS Steel International - UAE
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- The University of Queensland
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Standard Chartered Bank - UAE
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