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