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