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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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Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
Monday, 20 July 20
OIL PRICE OF $40-43 PER BARREL MORE OR LESS BALANCED - NOVAK | TASS
The Russian Ministry of Energy considers the current oil price of $40-43 per barrel more or less balanced and does not expect price changes after t ...
Monday, 20 July 20
SUPRAMAX: A 63,000 OPEN NORTH CHINA FIXING AN AUSTRALIAN ROUND IN THE LOW $10,000S - BALTIC BRIEFING
Capesize
The capesize market showed some resistance this week to recent losses as all routes saw a small uptick in value to end the week. With ...
Friday, 17 July 20
MISC MALAYSIA ENTERS INTO PURCHASE AGREEMENTS AND TIME CHARTER PARTIES FOR SIX VLECS
MISC Berhad (MISC) has entered into Memorandum of Agreements (MOAs) with six indirect wholly-owned subsidiaries of Zhejiang Satellite Petrochem ...
Wednesday, 15 July 20
HOW MEANINGFUL ARE SOME ESTIMATES FOR INDIA’S COAL CONSUMPTION DATA? - IEEFA
In recent years, BP's estimates for India have contained what appears to be a record of over-optimistic projections
BP’s a ...
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- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
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- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
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- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
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- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- MS Steel International - UAE
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- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
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- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
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