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