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