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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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Saturday, 27 September 14
OIL MARKET CONTANGO: SPECULATION ON FUTURE PRICES CAN BE A RISKY MOVE, EVEN FOR TANKER OWNERS HELLENIC SHIPPING NEWS
Despite the fact that tanker owners can easily use their vessels as floating storage units for oil, in a bid to exploit the current oil market dyna ...
Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
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- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- GMR Energy Limited - India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
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