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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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Wednesday, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
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- New Zealand Coal & Carbon
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- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
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- Bhushan Steel Limited - India
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- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
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- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- The University of Queensland
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- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
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- Marubeni Corporation - India
- White Energy Company Limited
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- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
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- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Planning Commission, India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Central Electricity Authority - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
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- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
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- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
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