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