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