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