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