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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, 11 July 14
UNITED STATE'S MONTHLY COAL OUTPUT FALLS 5.53% IN JUNE
COALspot.com – United States the world's second largest coal producer, produced approximately 18.1 million short tons (mmst) of coal in a ...
Thursday, 10 July 14
SGX EXPANDS ACROSS THE BULKS WITH NEW COAL PRODUCTS
COALspot.com: Singapore Exchange (SGX) is expanding its bulk commodity derivatives offering by launching new coking and thermal coal products on 4 ...
Thursday, 10 July 14
HANDY: SMALL INCREASE; PANAMAX: POSITIVE TONE; CAPESIZE: PAPER VALUES REMAIN WEEK
Handy
It is a general increase in activity in both hemispheres whereas rates have just experienced a small increase. In the Feast we see stable a ...
Wednesday, 09 July 14
SHIP INVESTMENTS ARE TRENDING LOWER
Most ship owners are deeming current ship prices on the high side, refraining from making serious commitments in new acquisitions or newbuilding or ...
Wednesday, 09 July 14
INDIAN GOVERNMENT ADVISED POWER UTILITIES TO INCREASE COAL IMPORTS
COALspot.com: The government of India has advised power utilities to increase coal imports to meet fuel shortages and those that have fuel supply p ...
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- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- White Energy Company Limited
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Planning Commission, India
- Australian Coal Association
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
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