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