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