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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, 03 April 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
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- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- The University of Queensland
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
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