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