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