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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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Tuesday, 18 February 20
ADARO REMAINS POSITIVE ON THE LONG-TERM FUNDAMENTALS OF COAL MARKET SUPPORTED BY THE SOUTHEAST ASIA AND SOUTH ASIA REGION
The global seaborne thermal coal market in 2019 was faced with macro and industry challenges which pushed international coa ...
Tuesday, 18 February 20
CORONAVIRUS AND ITS IMPACT ON YOUR CONTRACT - CAN YOU RELY ON 'FORCE MAJEURE'? - INCE
KNOWLEDGE TO ELEVATE
On 30 January 2020, the World Health Organization (WHO) declared that the outbreak of the Novel Coronavirus (officially t ...
Monday, 17 February 20
IMO-2020 SULPHUR CAP - ISSUES TO CONSIDER PRIOR TO THE IMPLEMENTATION OF THE CARRIAGE BAN ON 1 MARCH 2020 - STANDARD CLUB
With the IMO 2020 global sulphur cap now in force, members should bear in mind another significant date in relation to the ‘carriage ban&rsqu ...
Monday, 17 February 20
COVID-19: THE EFFECT OF THIS PUBLIC HEALTH EMERGENCY ON CHARTERPARTY TERMS - GARD
KNOWLEDGE TO ELEVATE
Is it useful to compare the COVID-19 with earlier disease outbreaks?
A comparison with the Ebola outbreak ...
Saturday, 15 February 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - REUTERS
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
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- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
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