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