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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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Friday, 26 November 21
CHINA FINDS COMPLIANCE PROBLEMS IN COAL PRICE INDEX PROBE - REUTERS
China’s state planner on Wednesday said it had discovered some “noncompliant” behaviour among coal price index providers as it an ...
Thursday, 25 November 21
SE ASIA POWER DEMAND TO RISE AS STATE SUPPORT MITIGATES COVID-19 IMPACT - FITCH RATINGS
Electricity demand in south-east Asia is likely to increase in 2021, following slow growth or contraction in 2020, thanks to state support that has ...
Thursday, 25 November 21
FITCH RATINGS INCREASES MOST GLOBAL METALS AND MINING PRICE ASSUMPTIONS - FITCH RATINGS
Fitch Ratings has increased most metals and mining price assumptions, particularly those that benefit from increased longer-term demand due to glob ...
Thursday, 25 November 21
CHINA'S COAL PRICE DROPS IN MID-NOVEMBER AMID GOVERNMENT’S SWEEPING MEASURES - GLOBAL TIMES
China’s coal prices have dropped significantly in mid-November compared with the beginning of the month, with the price of coking coal and co ...
Wednesday, 24 November 21
MARKET INSIGHT - INTERMODAL
Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chai ...
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- PTC India Limited - India
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Indika Energy - Indonesia
- MS Steel International - UAE
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
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