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