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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, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
Wednesday, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
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- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Australian Coal Association
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- The University of Queensland
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- VISA Power Limited - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
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