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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, 20 September 22
CHINA COAL OUTPUT UP 8.1 PCT IN AUGUST - XINHUA
China’s raw coal output posted stable expansion in August, official data showed.
The country produced 370 million tonnes of ra ...
Monday, 19 September 22
BUMA AUSTRALIA AWARDED A$400 MILLION CONTRACT EXTENSION BY BMA FOR GOONYELLA PROJECT
Press Release – PT Delta Dunia Makmur Tbk. (the "Company") announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA ...
Saturday, 17 September 22
CHINA WARNS COAL COMPANIES AGAINST DUAL CONTRACTS, KEEP PRICES STABLE - REUTERS
China’s state economic planner warned coal companies operating at ports in the Bohai Bay region to comply with their long-term contracts to k ...
Saturday, 17 September 22
IS A GLOBAL RECESSION IMMINENT? - WORLD BANK
Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has i ...
Saturday, 17 September 22
FITCH RATINGS REVISES GLOBAL METALS & MINING PRICE ASSUMPTIONS
Fitch Ratings has revised its metals and mining price assumptions reflecting evolving economic growth expectations and demand and supply dynamics.
...
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- Marubeni Corporation - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
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