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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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Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
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- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Economic Council, Georgia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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