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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, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
Thursday, 05 March 20
INDONESIA'S BUKIT ASAM 2019 OUTPUT RISES 10.2% Y/Y - REUTERS
PT Bukit Asam, Indonesia’s state-owned coal miner, said on Wednesday its output in 2019 rose 10.2% to 29.1 million tonnes.
Coa ...
Thursday, 05 March 20
SEEING REMOTELY - IN SAFETY: BUREAU VERITAS PERFORMS FIRST SURVEY BY DRONE - BUREAU VERITAS
Bureau Veritas Marine & Offshore (BV), a world leader in testing, inspection and certification (TIC) services has completed its first survey by ...
Wednesday, 04 March 20
AN EPIDEMIC OF UNCERTAINTY - THE CORONAVIRUS AND FORCE MAJEURE - WFW
KNOWLEDGE TO ELEVATE
Do the effects of the coronavirus give rise to legitimate force majeure claims in connection with shipbuilding contracts ...
Wednesday, 04 March 20
CHINA IMPORTED 76.8 MLN TONNES OF CRUDE OIL FOR JANUARY & FEBRUARY 2020; UP 3.4% YOY - REFINITIV | BC
The COVID-19 crisis has been gripping China already for almost two months now. It’s having a huge negative impact on the economy, and this is ...
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- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- The University of Queensland
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
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