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