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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, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
Thursday, 20 January 22
CHINESE COAL JUMPS OVER 6% ON PRE-HOLIDAY SUPPLY WORRY - REUTERS
China’s thermal coal futures soared more than 6% on Wednesday, hitting a level last seen in late November as investors grew concerned over ti ...
Thursday, 20 January 22
VIETNAM: COAL SECTOR SEES POSITIVE PROSPECT IN 2022 - VNA
With many signs of rising demand for coal in various economic sectors in 2022, the Vietnam National Coal – Mineral Industries Group (Vinacomi ...
Wednesday, 19 January 22
MARKET INSIGHT - INTERMODAL
Since the beginning of the year, we have been witnessing the BDI correcting downwards with sizable drops across all segments. Latest similar levels ...
Sunday, 09 January 22
INDONESIA MINISTER SAYS 'EMERGENCY OVER' ON COAL SUPPLY CRUNCH - REUTERS
Indonesia’s power emergency which has triggered a coal export ban is over but the government will still continue to discuss policies in this ...
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- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Australian Coal Association
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
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