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