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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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Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
Thursday, 11 June 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 ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
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- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- White Energy Company Limited
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- The University of Queensland
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
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