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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, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due ...
Thursday, 21 January 21
CHINA'S SPOT THERMAL COAL PRICES REFRESH RECORD HIGH - MYSTEEL
Despite the moderate rebound in temperatures across most regions of China after late December’s deep-freeze, thermal coal prices in the count ...
Wednesday, 20 January 21
CORONAVIRUS OUTBREAK IN HEBEI HAS LIMITED IMPACT ON CHINA'S STEEL INDUSTRY - FITCH RATINGS
The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China’s steel industry, Fitch Ratings says.
...
Wednesday, 20 January 21
MARKET INSIGHT - INTERMODAL
While 2020 is finally behind us, its negative impacts are still hovering over the shipping market. That being said, it is still too early to even s ...
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- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
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