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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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- Wilmar Investment Holdings
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- The University of Queensland
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
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