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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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Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
Wednesday, 19 August 20
MISC MARKS ITS MAIDEN FORAY INTO MAJOR DEEP-WATER PROJECT IN LATIN AMERICA WITH MERO 3 FPSO
MISC Berhad (MISC) is pleased to announce its acceptance of Letter of Intent (LOI) from Petróleo Brasileiro S.A. (Petrobras) for the provisi ...
Wednesday, 19 August 20
MARKET INSIGHT - GEORGE LAIOS | INTERMODAL
Since the Covid-19 outbreak, governments and central banks around the globe have been using their ammunition and stimulus packages to keep their ec ...
Wednesday, 19 August 20
INDIA SAW A SHARP DECLINE IN ENERGY COAL IMPORTS IN JANUARY - JUNE 2020; –27 PER CENT YOY - BHP
Energy coal prices were weak in the second half of financial year 2020, BHP says in its Economic and Commodity Outlook FY20.
Accordi ...
Wednesday, 19 August 20
COAL PRICES TO REMAIN SUBDUED THIS FISCAL AMID WEAK DEMAND, HIGH INVENTORY - THE HINDU BUSINESS LINE
Coal offtake is improving gradually as lockdown eases
Coal prices are expected to remain subdued to weak demand and high inventory l ...
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- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
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