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