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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, 03 April 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
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- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Planning Commission, India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- The University of Queensland
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Latin American Coal - Colombia
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
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