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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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Saturday, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Saturday, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
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- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- White Energy Company Limited
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
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