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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 December 22
AUSTRALIA TO CAP PRICES OF COAL, GAS TO DRIVE DOWN ENERGY BILLS - REUTERS
Australia will cap coal and gas prices for a year in a bid to shave utility bills for households and businesses hit by soaring costs because of the ...
Tuesday, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
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- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- MS Steel International - UAE
- The University of Queensland
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Deloitte Consulting - India
- Planning Commission, India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
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