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