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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, 12 September 22
COAL PRICE HIKE REMAINS DIFFICULT FOR CIL: CHAIRMAN TELLS ANALYSTS - PTI
Coal India on Thursday informed investors that increasing coal prices remains difficult in the current context when the economy is grappling with h ...
Friday, 09 September 22
GREECE WILL KEEP COAL-FIRED PLANTS RUNNING FOR LONGER AMID GAS CRISIS - REUTERS
Greece will keep seven coal-fired plants running for longer than previously planned as European countries adjust to a cut in gas flows coming from ...
Friday, 09 September 22
CHINA'S DROUGHT INTENSIFIES GLOBAL COAL SHORTAGE - REUTERS
China’s drought has sent coal prices surging as traders anticipate the lack of hydroelectric generation will force it to burn more coal to me ...
Thursday, 08 September 22
MOODY.S AFFIRMS ABM INVESTAMA'S B1 RATINGS FOLLOWING PLANNED MINORITY INVESTMENT IN COAL MINER; OUTLOOK STABLE
Moody's Investors Service has affirmed ABM Investama Tbk (P.T.)'s B1 corporate family rating (CFR), along with the B1 rating on its senior ...
Thursday, 08 September 22
MARKET INSIGHT - INTERMODAL
While the energy markets are historically stretched, Russian flows of crude oil are closely monitored as the oil trade is ultimately realigned. Mor ...
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- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- The University of Queensland
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
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