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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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Monday, 20 June 16
CS COAL INDICES CONTINUE UPWARD TREND SINCE END APRIL
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up again by 0.05 percent week over week to averaging $39.39 per ton this past we ...
Monday, 20 June 16
THE BDI HAS FELL 23 POINTS WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined this past week. The BDI was fell 3.77 percent fr ...
Friday, 17 June 16
CHINA'S NEW POLICY TO REDUCE WASTE IN RENEWABLE ENERGY - FITCH
Chinese renewable energy producers are likely to benefit from a new policy that guarantees a minimum amount of solar and wind power is purchased in ...
Friday, 17 June 16
KOMIPO INVITES BIDS FOR BITUMINOUS COAL FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
Friday, 17 June 16
U.S WEEKLY COAL PRODUCTION UP 7.7% - EIA
COALspot.com – U.S., the world’s one of the largest coal producer has produced approximately totalled an estimated 12.9 million short t ...
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- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- The University of Queensland
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
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