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