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