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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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Saturday, 26 June 21
KOSPO INVITED BIDS FOR 480,000 MT OF COAL PER ANNUM
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 480,000 MT of NCV 1 Min. 5,600 (Spec 1) /Min. 5,0 ...
Thursday, 24 June 21
FEBRUARY'S INCREASE IN COAL-FIRED ELECTRIC GENERATION REDUCED U.S. COAL STOCKPILES - EIA
Coal stockpiles at U.S. power plants decreased significantly from December 2020 to February 2021, including a draw of nearly 16 million tons in Feb ...
Wednesday, 23 June 21
MARKET INSIGHT - INTERMODAL
The first half of 2021 has brought a very sharp and continued recovery in the dry bulk market and while many where expecting a relatively strong ma ...
Thursday, 17 June 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR GLOBAL SEABORNE COAL TRADE; CHINA'S COAL IMPORTS - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade.
Total global loadings in the 12 months of 2020 were down -12 ...
Thursday, 17 June 21
FITCH RATINGS RAISES SHORT-TERM OIL AND GAS PRICE ASSUMPTIONS
Fitch Ratings has increased its 2021 and 2022 oil price assumptions for the Brent and West Texas Intermediate (WTI) benchmarks due to stronger year ...
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- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
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- Eastern Coal Council - USA
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- SMG Consultants - Indonesia
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- New Zealand Coal & Carbon
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- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
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- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
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- Thiess Contractors Indonesia
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- Georgia Ports Authority, United States
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- The University of Queensland
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- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- The Treasury - Australian Government
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
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- San Jose City I Power Corp, Philippines
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- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
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- Bukit Baiduri Energy - Indonesia
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- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
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- Wilmar Investment Holdings
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- Standard Chartered Bank - UAE
- Economic Council, Georgia
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- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
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- Energy Link Ltd, New Zealand
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- Independent Power Producers Association of India
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- Thai Mozambique Logistica
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
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- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
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