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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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Wednesday, 10 August 22
THE FUTURE OF COAL: EIGHT KEY THEMES FROM THE GLOBAL COAL FORUM - WOOD MACKENZIE
Coal investors face a multi-layered and unavoidable challenge: markets distorted by war, trade constraints and the existential threat of the energy ...
Saturday, 06 August 22
SUMITOMO Q1 PROFIT RISES 45% ON STRONGER PRICES OF COAL, NICKEL - REUTERS
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Saturday, 06 August 22
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Saturday, 30 July 22
NUANCES OF FORCE MAJEURE CLAUSE - BALTIC EXCHANGE
Knowledge to Elevate
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Saturday, 30 July 22
AEMO URGES QUICKER SHIFT TO RENEWABLES AMID COAL FAILURES AND SOARING FOSSIL FUEL COSTS
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- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Australian Coal Association
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
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