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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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Wednesday, 11 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.07 PCT - XINHUA
China Taiyuan coal transaction price index stood at 133.16 points Monday, up 0.07 percent week on week.
The index, released by China ...
Wednesday, 11 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
On the 4th of September the Baltic Dry Index marked its highest level for 2019, reaching 2,518 points, while the rest of the dry indices also recor ...
Tuesday, 10 March 20
SHIPPING MARKET ANALYSIS
It might be already overstated, but it seems to be important to point out once again how peculiar the current circumstances are.
Before the st ...
Tuesday, 10 March 20
EIA FORECASTS U.S ELECTRIC POWER SECTOR DEMAND FOR COAL WILL FALL BY 81 MMST (15%) IN 2020
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019. According to EIA's Shor ...
Tuesday, 10 March 20
CORONAVIRUS: DEMAND DOWNGRADES FOR BULK COMMODITIES - WOOD MACKENZIE
The coronavirus outbreak is a rapidly evolving news story – and a real wildcard for bulks demand. Our global experts are monitoring the impac ...
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- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- The University of Queensland
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
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