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