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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, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, ...
Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
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- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
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