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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, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due ...
Thursday, 21 January 21
CHINA'S SPOT THERMAL COAL PRICES REFRESH RECORD HIGH - MYSTEEL
Despite the moderate rebound in temperatures across most regions of China after late December’s deep-freeze, thermal coal prices in the count ...
Wednesday, 20 January 21
CORONAVIRUS OUTBREAK IN HEBEI HAS LIMITED IMPACT ON CHINA'S STEEL INDUSTRY - FITCH RATINGS
The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China’s steel industry, Fitch Ratings says.
...
Wednesday, 20 January 21
MARKET INSIGHT - INTERMODAL
While 2020 is finally behind us, its negative impacts are still hovering over the shipping market. That being said, it is still too early to even s ...
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- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- PTC India Limited - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
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