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