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