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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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Wednesday, 11 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.07 PCT - XINHUA
China Taiyuan coal transaction price index stood at 133.16 points Monday, up 0.07 percent week on week.
The index, released by China ...
Wednesday, 11 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
On the 4th of September the Baltic Dry Index marked its highest level for 2019, reaching 2,518 points, while the rest of the dry indices also recor ...
Tuesday, 10 March 20
SHIPPING MARKET ANALYSIS
It might be already overstated, but it seems to be important to point out once again how peculiar the current circumstances are.
Before the st ...
Tuesday, 10 March 20
EIA FORECASTS U.S ELECTRIC POWER SECTOR DEMAND FOR COAL WILL FALL BY 81 MMST (15%) IN 2020
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019. According to EIA's Shor ...
Tuesday, 10 March 20
CORONAVIRUS: DEMAND DOWNGRADES FOR BULK COMMODITIES - WOOD MACKENZIE
The coronavirus outbreak is a rapidly evolving news story – and a real wildcard for bulks demand. Our global experts are monitoring the impac ...
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- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- The University of Queensland
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
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