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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, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Planning Commission, India
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
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