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