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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, 04 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
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- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
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