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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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Saturday, 31 October 15
ADARO ENERGY'S CORE EARNINGS DECLINE 21 PER CENT FOR THE NINE MONTHS PERIOD TO SEPTEMBER 2015
COALspot.com: Adaro Energy's core earnings decline 21% to US$228 Million for first 9months of this year compared to the same period last year. ...
Friday, 30 October 15
INDONESIA'S COAL EXPORTS DROP ON LOW PRICES - THE JAKARTA POST
Indonesia's coal exports significantly dropped in the first nine months of the year as coal companies continued to suffer from low prices in ad ...
Friday, 30 October 15
CHINESE MINERAL IMPORTS: MOVING ON FROM INDONESIA? - CLARKSONS
China has accounted for almost 90% of global imports of nickel ore and bauxite in recent years and was therefore heavily hit by the Indonesian mine ...
Friday, 30 October 15
COAL PRODUCTION IN THE UNITED STATES INCREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 29 October 15
IRAN'S RETURN TO OIL MARKETS WILL HAVE TEMPERED IMPACT FOR THE TANKER SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While many analysts appear to be fearful of a potential incremental rise in tanker ships’ supply, as a result of the imminent return of Iran ...
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- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Dalmia Cement Bharat India
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