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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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Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
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- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Parliament of New Zealand
- White Energy Company Limited
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
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