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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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Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
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- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
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