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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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Saturday, 28 March 20
ASIA'S COAL MARKETS DIVERGE ON QUALITY LINES AS CORONAVIRUS HITS INDIA - REUTERS
Asia’s seaborne coal market is increasingly diverging between higher-quality Australian coal, where prices are holding up despite the economi ...
Friday, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 March 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 ...
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- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
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