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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, 10 July 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 ...
Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weaknes ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
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- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- VISA Power Limited - India
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
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