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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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Wednesday, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
Wednesday, 15 July 20
MARKET INSIGHT - INTERMODAL
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
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- Orica Mining Services - Indonesia
- Planning Commission, India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- PTC India Limited - India
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Australian Coal Association
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
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