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