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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, 23 August 21
CHINESE COAL PRODUCTION RISES 4.9 PCT IN 1ST 7 MONTHS OF 2021 - NBS
Official figures demonstrated that the Chinese raw coal production surged 4.9 percent annually to 2.26 billion tonnes in the January-July period of ...
Friday, 20 August 21
ARE WE LOOKING AT THE NEXT DRY BULK SUPER CYCLE? IS IT EVEN A CYCLE? - BIMCO
Throughout the first half of the year, talk of a new dry bulk super cycle has been on many lips as commodity prices have soared to multi-year highs ...
Friday, 20 August 21
BIMCO'S SHIPPING NUMBER OF THE WEEK: CHINESE IRON ORE IMPORTS FALL TO 14-MONTH LOW IN JULY - PETER SAND
Chinese iron ore imports fell to 88.5 million tonnes in July, the lowest level since May 2020. The fall in July means that accumulated imports are ...
Friday, 20 August 21
SOARING DEMAND FOR THE WORLD’S LEAST-LIKED COMMODITY SEES THERMAL COAL PRICES JUMP 106% THIS YEAR - CNBC
Soaring electricity demand, infrastructure woes and a surge in global gas prices have triggered an extraordinary rally for the world’s least ...
Friday, 20 August 21
CHINA’S IRON ORE IMPORTS CONTRACTED YEAR-ON-YEAR BY 2% IN 2018 AND GREW YEAR-ON-YEAR BY ONLY 1% IN 2019 - COMMODORE RESEARCH
Examining the last ten years of China’s crude steel output and iron ore imports shows that China’s iron ore imports have stayed r ...
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- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
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