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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, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 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 ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
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- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
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