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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, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
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- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- The University of Queensland
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
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