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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, 04 October 22
INDONESIAN COAL PRICE REFERENCE SURGE AGAIN TO RECORD HIGH
COALspot.com: Indonesian Coal Price Reference reached another record high in October as Russia's war in Ukraine continues to spark a surge in c ...
Sunday, 02 October 22
MISC STRENGTHENS ITS PARTNERSHIP WITH SEARIVER MARITIME
MISC Berhad (MISC) today announced that its subsidiaries Polaris LNG Three Pte. Ltd. and Polaris LNG Four Pte. Ltd. have secured long-term time cha ...
Thursday, 29 September 22
MARKET INSIGHT - INTERMODAL
This week, focus turns to the 38th APPEC Conference, where leading professionals from the global oil industry will discuss the future key drivers o ...
Thursday, 29 September 22
HIGH COAL PRICES REMAIN A CONCERN FOR DOMESTIC NON-FERROUS METAL COMPANIES - ICRA
According to ICRA on Monday, the high price of coal will have a negative effect on the profitability of domestic non-ferrous metal companies that m ...
Tuesday, 27 September 22
14% INCREASE IN EUROPEAN COAL DEMAND TO BE SHORT-TERM TREND - WOOD MACKENZIE
European seaborne thermal coal demand is projected to increase 14% or 12 million metric tonnes (Mt) this year to 98 Mt as it grapples with the curr ...
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- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
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