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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, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Planning Commission, India
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- PTC India Limited - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Videocon Industries ltd - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
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