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