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