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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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Thursday, 04 November 21
FASTER DECARBONISATION: BACK TO BASICS FOR THE MINING INDUSTRY? - WOOD MACKENZIE
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the ...
Wednesday, 03 November 21
CHINA TO LAUNCH NEW DATA MONITORING SYSTEM, TARGETING COAL MARKET SPECULATION, HOARDING - GLOBAL TIMES
China’s top economic planner announced on Sunday a new data system for supervising the implementation of medium- and long-term contracts of c ...
Wednesday, 03 November 21
CHINA’S STATE PLANNER SAYS COAL SUPPLY IMPROVING, PRICES STABILISING - REUTERS
China’s coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while ...
Wednesday, 03 November 21
HIGHER COKING COAL PRICES TO PARE PROFITABILITY OF STEELMAKERS IN SECOND HALF OF FY22 - CRISIL RATINGS
The operating margin of primary steelmakers will reduce by a third to 24-26% in the second half of this fiscal versus the first half as input cost ...
Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
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- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Anglo American - United Kingdom
- Bhatia International Limited - India
- The University of Queensland
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
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