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