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