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