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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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Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
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- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Planning Commission, India
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Australian Coal Association
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
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