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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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Friday, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Cement Manufacturers Association - India
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