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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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Saturday, 28 March 20
ASIA'S COAL MARKETS DIVERGE ON QUALITY LINES AS CORONAVIRUS HITS INDIA - REUTERS
Asia’s seaborne coal market is increasingly diverging between higher-quality Australian coal, where prices are holding up despite the economi ...
Friday, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 March 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 ...
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- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Australian Coal Association
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
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