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