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