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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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Monday, 29 June 20
CHINA COAL IMPORT OUTLOOK: MANY MOVING PARTS, FORECAST TO FALL 10% YOY - GHEE PEH | IEEFA
China’s coal demand declined in the first quarter of 2020. According to the China National Coal Association, the country consumed 870mt in th ...
Monday, 29 June 20
ULTRAMAX: A 58,000 FIXING DELIVERY SINGAPORE TRIP, VIA EAST COAST INDIA, REDELIVERY CHINA IN THE LOW $12,000S - BALTIC BRIEFING
Capesize
As the halfway mark of 2020 arrives, the capesize market is making new highs for the year. From persistent lows earlier caused by a ba ...
Saturday, 27 June 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 26 June 20
WHAT TODAY'S BAILOUTS CAN DO FOR TOMORROW'S ECONOMIES - WORLD ECONOMIC FORUM
The COVID-19 crisis provides an opportunity for governments to build fairer, more sustainable and more resilient economies.
Governments a ...
Thursday, 25 June 20
ALL YOU WANT TO KNOW ABOUT COAL MINE AUCTIONS - THE HINDU BUSINESS LINE
Last week, Prime Minister Narendra Modi threw open the auction of 41 coal blocks for commercial mining. The decision, which was part of the announc ...
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- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- White Energy Company Limited
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
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