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