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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, 20 September 22
CHINA COAL OUTPUT UP 8.1 PCT IN AUGUST - XINHUA
China’s raw coal output posted stable expansion in August, official data showed.
The country produced 370 million tonnes of ra ...
Monday, 19 September 22
BUMA AUSTRALIA AWARDED A$400 MILLION CONTRACT EXTENSION BY BMA FOR GOONYELLA PROJECT
Press Release – PT Delta Dunia Makmur Tbk. (the "Company") announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA ...
Saturday, 17 September 22
CHINA WARNS COAL COMPANIES AGAINST DUAL CONTRACTS, KEEP PRICES STABLE - REUTERS
China’s state economic planner warned coal companies operating at ports in the Bohai Bay region to comply with their long-term contracts to k ...
Saturday, 17 September 22
IS A GLOBAL RECESSION IMMINENT? - WORLD BANK
Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has i ...
Saturday, 17 September 22
FITCH RATINGS REVISES GLOBAL METALS & MINING PRICE ASSUMPTIONS
Fitch Ratings has revised its metals and mining price assumptions reflecting evolving economic growth expectations and demand and supply dynamics.
...
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- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- The University of Queensland
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
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