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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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Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
Monday, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
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- Lanco Infratech Ltd - India
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Planning Commission, India
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Australian Coal Association
- The State Trading Corporation of India Ltd
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