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