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