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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, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
Wednesday, 15 July 20
MARKET INSIGHT - INTERMODAL
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
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- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Australian Coal Association
- London Commodity Brokers - England
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- The University of Queensland
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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