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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, 05 May 14
HUANENG CLEAN ENERGY RESEARCH INSTITUTE HAS CONFIRMED TO SPEAK AT CCF2014
Press Release: Produced by CDMC Events, The 13th Clean Coal Forum 2014 will be held on June 12,13, 2014 in Beijing, China. We are glad to invite ...
Monday, 05 May 14
SUB BIT-FOB INDONESIA COAL SWAPS LOST GROUND LAST WEEK
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports ...
Monday, 05 May 14
API 8 CFR SOUTH CHINA COAL SWAP FOR AVERAGE Q3 14 DELIVERIES: LOST 0.82% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 0.82 percent month on month and closed at US$ 75.20 per mt as o ...
Sunday, 04 May 14
INDONESIA TO INDIA FREIGHT RATES ARE SHOWING POSITIVE TREND
COALspot.com: The freight market is seems to be some recovery as cape index has increased by 7.84 pct week on week. Cape index closed at 1829 po ...
Friday, 02 May 14
ADARO ENERGY STARTS YEAR 2014 WELL DESPITE CURRENT MARKET CONDITIONS
COALspot.com: Adaro Energy, the second largest Indonesian coal miner's revenue increased 14% to US$ 845 million due to higher sales volume, ...
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- Interocean Group of Companies - India
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- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
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- Bhoruka Overseas - Indonesia
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- Georgia Ports Authority, United States
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- Coal and Oil Company - UAE
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- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
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- Minerals Council of Australia
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- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
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- Electricity Authority, New Zealand
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- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
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- Global Coal Blending Company Limited - Australia
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- Eastern Coal Council - USA
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- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
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- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
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- Gujarat Mineral Development Corp Ltd - India
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- Indian Energy Exchange, India
- The University of Queensland
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- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
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- Meenaskhi Energy Private Limited - India
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- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
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- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
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- Metalloyd Limited - United Kingdom
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- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
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- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Australian Coal Association
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- PowerSource Philippines DevCo
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- Planning Commission, India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
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- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
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- LBH Netherlands Bv - Netherlands
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- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
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- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
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- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
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