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