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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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- GAC Shipping (India) Pvt Ltd
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- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
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- Wilmar Investment Holdings
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- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
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- Karbindo Abesyapradhi - Indoneisa
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- Global Green Power PLC Corporation, Philippines
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- PTC India Limited - India
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- Trasteel International SA, Italy
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- Semirara Mining Corp, Philippines
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- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
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- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
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- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
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- Economic Council, Georgia
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- The State Trading Corporation of India Ltd
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- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
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- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Minerals Council of Australia
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- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
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- Bukit Baiduri Energy - Indonesia
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- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
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- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
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- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
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- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
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- Eastern Energy - Thailand
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- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
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- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Australian Coal Association
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
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- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
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- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
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