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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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Friday, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
Wednesday, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
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- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Planning Commission, India
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
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