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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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- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Independent Power Producers Association of India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
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