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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, 25 April 14
US PRODUCED APPROXIMATELY 19 MILLION SHORT TONS OF COAL IN A WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
Friday, 25 April 14
2ND MYANMAR ELECTRIC POWER CONVENTION 2014 IS THE GATEWAY TO MYANMAR POWER INDUSTRY!
Press Release: 2nd Myanmar Electric Power Convention (MEPC) 2014 is scheduled on 21-23 October, 2014 at Traders Hotel in Yangon, Myanmar. MEPC o ...
Friday, 25 April 14
DRY BULK MARKET LOOKING FOR NEW TRACTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market seems to have gained its footing after the past few dissapointing weeks, during which the Baltic Dry Index (BDI) shedded mos ...
Thursday, 24 April 14
HANDY : A FLOW OF FRESH REQUIREMENTS LIFTING THE PACIFIC SLOWLY TO US$ 10-11 K BSS SINGAPORE FOR COAL ROUNDS
Handy
There is still no place to hide in the Atlantic for the smaller but flexible sizes. Slow and weak seems to be the headlines, although th ...
Wednesday, 23 April 14
EUROPE WOULD BE HARD PRESSED TO REPLACE RUSSIAN GAS, FITCH RATINGS SAYS
A ban on Russian gas imports to the EU would cause substantial disruption to Europe's economy and industry, Fitch Ratings says. In the immed ...
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- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
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