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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, 12 April 16
NO FURTHER SIGNIFICANT COAL PRICE DECLINES IN THE FUTURE - FITCH
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The Finance Ministry and the Directorate of Revenue Intelligence (DRI) of India are said to have stepped up investigations into the alleged over-in ...
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- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- The University of Queensland
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Australian Coal Association
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
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