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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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Friday, 11 October 19
KOREA SOUTH-EAST POWER TO IMPORT LCV COAL IN NOVEMBER
COALspot.com: South Korea’s Korea South-East Power Co., Ltd. (KOEN) has issued an international tender for 75,000 Metric Tons low calorific v ...
Thursday, 10 October 19
THERMAL COAL IMPORT LIKELY TO CROSS 200 MT IN 2019-20 - TIME OF INDIA
The country's overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current financial year, according to Icra. ...
Wednesday, 09 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we have already stated in previous insights, we had expected that the recovery on rates and activity across all segments in the offshore market ...
Thursday, 03 October 19
OIL PRICE ASSUMPTIONS UNCHANGED, NBP GAS PRICE LOWERED - FITCH RATINGS PRIMARY - FITCH RATINGS
Our oil price assumptions are unchanged, despite the recent price volatility following the attacks on Saudi Arabia's oil infrastructure, Fitch ...
Thursday, 03 October 19
SHIPPING MARKET INSIGHT
Edible oil products across the board are showing healthy amount of export activity, however, rates in most cases are struggling to move accordingly ...
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- Videocon Industries ltd - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- White Energy Company Limited
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- PTC India Limited - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Dalmia Cement Bharat India
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