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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, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
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