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