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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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Monday, 29 June 20
CHINA COAL IMPORT OUTLOOK: MANY MOVING PARTS, FORECAST TO FALL 10% YOY - GHEE PEH | IEEFA
China’s coal demand declined in the first quarter of 2020. According to the China National Coal Association, the country consumed 870mt in th ...
Monday, 29 June 20
ULTRAMAX: A 58,000 FIXING DELIVERY SINGAPORE TRIP, VIA EAST COAST INDIA, REDELIVERY CHINA IN THE LOW $12,000S - BALTIC BRIEFING
Capesize
As the halfway mark of 2020 arrives, the capesize market is making new highs for the year. From persistent lows earlier caused by a ba ...
Saturday, 27 June 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 26 June 20
WHAT TODAY'S BAILOUTS CAN DO FOR TOMORROW'S ECONOMIES - WORLD ECONOMIC FORUM
The COVID-19 crisis provides an opportunity for governments to build fairer, more sustainable and more resilient economies.
Governments a ...
Thursday, 25 June 20
ALL YOU WANT TO KNOW ABOUT COAL MINE AUCTIONS - THE HINDU BUSINESS LINE
Last week, Prime Minister Narendra Modi threw open the auction of 41 coal blocks for commercial mining. The decision, which was part of the announc ...
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- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- The University of Queensland
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
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