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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, 11 April 16
BDI ROSE TO ITS HIGHEST LEVEL IN FOUR MONTHS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 08 April 16
COASTAL ENERGEN CROSSES GENERATION OF 1068 MW AND EXPORT OF 1004 MW FROM ITS 1200 MW IPP
COALspot.com: Coal & Oil (C&O) Group, an India centric Energy & Infrastructure company announced that their Coastal Energen' ...
Friday, 08 April 16
WEEKLY US COAL PRODUCTION ESTIMATES DIP 5.4% TO 11 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11 million short ...
Friday, 08 April 16
MINISTER OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO ISSUE REGULATION TO GUARANTEE THE COAL SUPPLY TO ITS 35K POWER PLANT PROJECTS
COALspot.com: In order to guarantee the supply of coal for 35,000 megawatt (mw) coal based power plants ( still in planning stage), the Minister of ...
Thursday, 07 April 16
CHINA STEEL CAPACITY CUTS FACE SOCIAL, FINANCIAL HURDLES - FITCH RATINGS
Fitch Ratings says today that the Chinese government's supply-side reform of the steel sector faces immense social and financial challenges. Th ...
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- Australian Coal Association
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
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