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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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Wednesday, 01 December 21
SUPPLY OF COAL TO POWER PLANTS IN NOV MORE THAN CONSUMPTION: JOSHI - PTI
The supply of coal to power plants in November is more than the consumption, resulting in rise in stock of dry fuel at power plants, and this trend ...
Wednesday, 01 December 21
MARKET INSIGHT - INTERMODAL
Essentially, anyone involved in the shipping and commodity markets still struggle with commodity supply issues and skyrocketing prices in the conte ...
Tuesday, 30 November 21
CHINA'S TOP ECONOMIC PLANNER SUMMONS COAL PRODUCERS; LONG-TERM PRICING MECHANISM IS ADVISED - GLOBAL TIMES
China’s top economic planner the National Development and Reform Commission (NDRC) said on Monday that they summoned coal producers for a hea ...
Tuesday, 30 November 21
CHINA'S COAL PRICES PLUNGE AFTER GOVT SIGNALS MORE PRICE REGULATION - REUTERS
China’s thermal coal futures dropped 5.6% on Monday after the state economic planner signaled further regulations for prices of the dirty pow ...
Friday, 26 November 21
AS COAL MARKET STABILIZES, CHINA STEPS UP NATURAL GAS SUPPLY TO MEET WINTER DEMAND - GLOBAL TIMES
The daily supply of natural gas in China has exceeded 1 billion cubic meters (bcm) since November began, up 11 percent year-on-year, data from stat ...
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- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
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