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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, 27 May 21
KOMIPO INVITED BIDS FOR 1.56 MILLION TONS OF BITUMINOUS COAL
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Thursday, 27 May 21
CHINA POWER DEMAND EXCEEDS PRE-COVID-19 LEVELS; THERMAL OUTPUT STRONG - FITCH RATINGS
Rising Consumption: Total power consumption rose by 21.2% yoy to 1,921.9GWh in 1Q21 due to the fast recovery of China’s economy, after a drop ...
Thursday, 27 May 21
CHINA'S POWER DEMAND EXCEEDS PRE-PANDEMIC LEVELS; RENEWABLES TO DRIVE DEVELOPMENT - FITCH RATINGS
China's power consumption exceeded the pre-Covid-19 levels in 1Q21 due to the country's fast economic recovery, with strong output from the ...
Wednesday, 26 May 21
THE INDONESIA COAL PRICE REFERENCE FOR MAY 2021 SETTLES AT US$ 89.74 PER TON
COALspot.com: The Indonesia coal price reference for May 2021 settles at US$ 89.74 per ton FOB vessel.
The Indonesia coal pric ...
Wednesday, 26 May 21
MARKET INSIGHT - INTERMODAL
Last year crude tankers’ newbuilding contracting activity was devastated by the economic effects of the Covid-19 pandemic and the cloud of un ...
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- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Planning Commission, India
- Aditya Birla Group - India
- Australian Coal Association
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- The University of Queensland
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
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