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