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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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Monday, 02 July 18
THIESS SECURES NEW QCOAL NORTHERN HUB $480M CONTRACT
Thiess has been awarded a new A$480 million contract by QCoal to continue operations at the QCoal Northern Hub located in Queensland’s Bowen ...
Friday, 29 June 18
THE LBH GROUP AND RHENUS PLAN TO ESTABLISH A JOINT COMPANY
Press Release: The port services provider, the LBH Group, and the logistics specialist Rhenus, are planning to cooperate closely in the European in ...
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SUPRAMAX: INDO / CHINA COAL ROUNDS PAYING AROUND USD HIGH 11000 - FEARNLYS
Capesize
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Friday, 29 June 18
JAPAN'S TOHOKU ELEC, GLENCORE ABANDON APRIL-MARCH COAL CONTRACT TALKS - REUTERS
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Wednesday, 27 June 18
SHIPPING MARKET INSIGHT - APOSTOLOS ROMPOPOULOS
After the abolishment of the trade embargo against Iran, there was a lot of optimism from the country’s side, as after quite some time a numb ...
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- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
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