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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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Thursday, 04 November 21
FASTER DECARBONISATION: BACK TO BASICS FOR THE MINING INDUSTRY? - WOOD MACKENZIE
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the ...
Wednesday, 03 November 21
CHINA TO LAUNCH NEW DATA MONITORING SYSTEM, TARGETING COAL MARKET SPECULATION, HOARDING - GLOBAL TIMES
China’s top economic planner announced on Sunday a new data system for supervising the implementation of medium- and long-term contracts of c ...
Wednesday, 03 November 21
CHINA’S STATE PLANNER SAYS COAL SUPPLY IMPROVING, PRICES STABILISING - REUTERS
China’s coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while ...
Wednesday, 03 November 21
HIGHER COKING COAL PRICES TO PARE PROFITABILITY OF STEELMAKERS IN SECOND HALF OF FY22 - CRISIL RATINGS
The operating margin of primary steelmakers will reduce by a third to 24-26% in the second half of this fiscal versus the first half as input cost ...
Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
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- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- The University of Queensland
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
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