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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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Thursday, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
Thursday, 05 March 20
INDONESIA'S BUKIT ASAM 2019 OUTPUT RISES 10.2% Y/Y - REUTERS
PT Bukit Asam, Indonesia’s state-owned coal miner, said on Wednesday its output in 2019 rose 10.2% to 29.1 million tonnes.
Coa ...
Thursday, 05 March 20
SEEING REMOTELY - IN SAFETY: BUREAU VERITAS PERFORMS FIRST SURVEY BY DRONE - BUREAU VERITAS
Bureau Veritas Marine & Offshore (BV), a world leader in testing, inspection and certification (TIC) services has completed its first survey by ...
Wednesday, 04 March 20
AN EPIDEMIC OF UNCERTAINTY - THE CORONAVIRUS AND FORCE MAJEURE - WFW
KNOWLEDGE TO ELEVATE
Do the effects of the coronavirus give rise to legitimate force majeure claims in connection with shipbuilding contracts ...
Wednesday, 04 March 20
CHINA IMPORTED 76.8 MLN TONNES OF CRUDE OIL FOR JANUARY & FEBRUARY 2020; UP 3.4% YOY - REFINITIV | BC
The COVID-19 crisis has been gripping China already for almost two months now. It’s having a huge negative impact on the economy, and this is ...
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- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- PTC India Limited - India
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
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