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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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Friday, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
Friday, 10 October 14
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SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
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Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
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- Australian Coal Association
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
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