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