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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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Saturday, 07 December 19
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Saturday, 07 December 19
SOUTH AFRICAN COAL PRICE SURGE, WHILE OTHERS LANGUISH, IS TROUBLING - REUTERS
Coal prices around the world are gently sliding as demand from top importers such as China, India and even Europe remains subdued amid a so far mil ...
Saturday, 07 December 19
SUPRAMAX: OVERALL, THE BALTIC SUPRAMAX INDEX REMAINED IN POSITIVE MODE, DESPITE SOME AREAS LACKING FRESH ACTIVITY - BALTIC BRIEFING
Capesize
This week the Capesize market maintained healthy earnings, as an end of year surge took the Capesize 5TC back up to $25,202 by mid-wee ...
Friday, 06 December 19
INDONESIA COAL BENCHMARK PRICE FOR DECEMBER INCREASES BY US 3 CENTS MOM
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 December 19
IMO 2020 IS ABOUT TO GET REAL - GAVIN THOMPSON
As I write this edition of the APAC Energy Buzz from my desk in Singapore I can see ships. Lots of ships. No surprise given that Singapore is among ...
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- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Australian Coal Association
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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