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