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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, 10 July 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 ...
Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weaknes ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
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- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- White Energy Company Limited
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
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