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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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Tuesday, 13 November 18
INDIA: POWER DEMAND UP; COAL STOCKS AT MINES AT A 5-YEAR LOW - FINANCIAL EXPRESS
Stocks at Coal India mines plunged to a five-year low of 21 million tonne (mt) in October, as a sudden surge in demand for the fuel from the power ...
Monday, 12 November 18
COAL BUSINESS REMAINS PROSPECTIVE - ANTARA
Coal business happened to be sluggish in the 2012-2015 period because coal prices in the world market fell sharply, but it has begun to crawl up si ...
Monday, 12 November 18
INDONESIA'S HBA ENDS DECLINE IN NOVEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 07 November 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
This has been another active week in the second-hand market for both the dry bulk and tanker sectors. Buying interest has recently increased, which ...
Monday, 05 November 18
TIGHTER FUEL RULES COULD RAISE SHIPOWNERS' COSTS AND CAPEX - FITCH RATINGS
More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies’ operating costs and capex n ...
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- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
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