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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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Wednesday, 01 December 21
SUPPLY OF COAL TO POWER PLANTS IN NOV MORE THAN CONSUMPTION: JOSHI - PTI
The supply of coal to power plants in November is more than the consumption, resulting in rise in stock of dry fuel at power plants, and this trend ...
Wednesday, 01 December 21
MARKET INSIGHT - INTERMODAL
Essentially, anyone involved in the shipping and commodity markets still struggle with commodity supply issues and skyrocketing prices in the conte ...
Tuesday, 30 November 21
CHINA'S TOP ECONOMIC PLANNER SUMMONS COAL PRODUCERS; LONG-TERM PRICING MECHANISM IS ADVISED - GLOBAL TIMES
China’s top economic planner the National Development and Reform Commission (NDRC) said on Monday that they summoned coal producers for a hea ...
Tuesday, 30 November 21
CHINA'S COAL PRICES PLUNGE AFTER GOVT SIGNALS MORE PRICE REGULATION - REUTERS
China’s thermal coal futures dropped 5.6% on Monday after the state economic planner signaled further regulations for prices of the dirty pow ...
Friday, 26 November 21
AS COAL MARKET STABILIZES, CHINA STEPS UP NATURAL GAS SUPPLY TO MEET WINTER DEMAND - GLOBAL TIMES
The daily supply of natural gas in China has exceeded 1 billion cubic meters (bcm) since November began, up 11 percent year-on-year, data from stat ...
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- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Australian Coal Association
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Parliament of New Zealand
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
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