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