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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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Friday, 04 November 22
CHINA EXPANDS COAL TERM CONTRACTS TO ALL MINES TO STABILIZE MARKET - REUTERS
China has expanded long-term thermal coal supply contracts for 2023 to all coal mines and asked power utilities to source more of their demand thro ...
Thursday, 03 November 22
HANDYSIZE VALUES MOVING UP IN OCTOBER, WHILE LNG VALUES SKYROCKET - VESSELSVALUE
Handysize values have increased this month across most ages, following a period of decline. Values for generic 10 year old Handysizes have moved up ...
Thursday, 03 November 22
EUROPEAN GAS SUPPLY SURPLUS, NOVEMBER HBA DOWN TO US$ 308.2 PER TON - ESDM
European gas supply conditions have a major influence in determining fluctuations in the Reference Coal Price (HBA). The November 2022 HBA recorded ...
Wednesday, 02 November 22
MARKET INSIGHT - INTERMODAL
Only five weeks before western sanctions’ full effect, uncertainty over energy has markets and governments on the edge. What was initially th ...
Tuesday, 01 November 22
CHINA COAL TRADE DISRUPTED BY COVID OUTBREAKS AS WINTER LOOMS - REUTERS
China’s strict COVID-19 policy is constraining coal supplies and pushing up prices, industry officials and traders say, just weeks before the ...
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- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Posco Energy - South Korea
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
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