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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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Thursday, 07 July 22
COAL INDIA'S PRODUCTION SETS RECORD INCREASE OF 29% YOY AT 36 MT IN Q1FY23 - IIFL SECURITIES
Coal India Limited (CIL) has ended April-June quarter FY’23 capping a historic high of 29% yoy output growth, compared to same quarter FY&rsq ...
Wednesday, 06 July 22
MARKET INSIGHT - INTERMODAL
Following the 3rd Decarbonizing Shipping Forum, held in Hamburg on June 2022, there has been a meaningful resurgence of discussions within the ship ...
Tuesday, 05 July 22
WHY ARE VLSFO PRICES SO HIGH, ESPECIALLY IN SINGAPORE? - STEVE CHRISTY, INTEGR8 FUELS
Tightness in products still trumps talks of recession
Last month we wrote about the fears of recession versus the tightness in product markets ...
Tuesday, 05 July 22
ADANI ENTERPRISES LOWEST BIDDER IN COAL INDIA'S IMPORT TENDER: REPORT - BUSINESS STANDARD
Coal India Ltd floated its first import tender on behalf of power companies, where Adani Enterprises Ltd came out to be the lowest bidder, a report ...
Tuesday, 05 July 22
CHINA POLICY KEY FOR IRON ORE OUTLOOK - ING
China’s covid lockdowns and recessionary risks hit iron ore
Iron ore prices have fallen significantly from their year-to-date high of US$ ...
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- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- GMR Energy Limited - India
- Anglo American - United Kingdom
- The University of Queensland
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
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