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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, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Saturday, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
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- Sical Logistics Limited - India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
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